Iron ore futures were a touch softer on Wednesday as investors assessed the supply outlook for iron ore following the recent closure of Vale’s Itabria complex.
Investors grew concerned over tight supply after Vale was ordered to shut down Itabria, which accounts for over 10% of Vale’s output, in the state of Minas Gerais last weekend.
Hongyuan Futures Ltd believed that it is nearly impossible for Vale to maintain its full-year guidance of 310-330 million tonnes. Analysts at UBS Group AG warned that prices are now “on a knife edge”.
Meanwhile, an article published by China Daily suggested the closure of the Itabria complex will have little impact on the Chinese and global iron ore market.
Analysts quoted in the article all pointed out that the supply shortage is likely to be temporary. “We expect the temporary shortage in iron ore supplies won’t pose too much of an impact on the iron ore market in China, which has already resumed production.” The article quoted a senior analyst at Bloomberg Intelligence as saying.
Futures in Singapore briefly fell below $100 in London. Jul was seen trading down from 100.95 down to below 100.0 before recovering to just under 100.5 as of 11 am London time. Q3 was also traded down from 98.0 to 97.35.