Chinese futures rose further over supply concerns as Vale was ordered to suspend its Itabira mine amid coronavirus pandemic.
Thus, the most-actively traded iron ore futures on the Dalian Commodity Exchange (DCE), for September delivery, jumped up by 5.53% day-on-day to RMB 783 per tonne on Monday.
However, the steel rebar contract on the Shanghai Futures Exchange only saw slight gain of 0.36% day-on-day to RMB 3,616 per tonne at start of the week.
Vale maintains guidance despite Itabira mine closure
Brazil’s Vale had maintained its output guidance at 310-330 million mt for the year, unchanged despite the shutdown of Itabira mining complex.
So far, Vale had provisioned up to 15 million tonnes of iron ore losses in viewing of the rising coronavirus cases in the country.
Thus, the mining major believed that the provision could cover the production shortfall of the closure of Itabira mine with annual output capacity of around 36 million tonnes, while the monthly production was estimated at around 2.7 million tonnes.
The trigger point for the shutdown was due to around 200 workers tested positive for coronavirus in late May, which prompted the Brazilian court to order a shutdown of the mining complex.
However, Vale soon won an injunction against the court ruling to operate again but only to have the decision revoked again on June 6 by regional labour court to opt for the mine closure.
China iron ore import rises by 3.9% on-year in May
China’s iron ore import rose higher in May, up 3.9% year-on-year to 87.03 million tonnes, but down 9% at month-on-month basis, according to the General Administration of Customs.
The yearly rise was attributed to Chinese steel mills’ ramping up their output to make up for the loss time caused by the coronavirus pandemic.
In the meantime, the iron ore port inventory dropped to almost a four-years low to 109.5 million tonnes by end of May, as there was a huge drawdown of port stocks, driven by rising construction activities in China.