Iron ore futures surged above $100 on Monday after part of Vale’s Brazilian operations were ordered to be shut down due to the Coronavirus.
Prosecutors had alleged that workers were at risk at the mine complex of Itabira in the state of Minas Gerais after 188 of them were tested positive. The latest development put more than 10% of the miner’s iron ore output offline. Brazil is one of the countries worst hit by the Coronavirus, trailing only to US in number of infections.
Meanwhile, Chinese demand remains buoyant, with port inventories dropped to a near four-year low. Iron ore port inventories fell to 109.5 million tonnes as of the end of May due to rising construction activities in China.
Further disruptions could be on the horizon we southern China approaches its rainy season which could slow down construction activities and limit steel demand in the region.
Iron ore futures rallied as high as 102.9 during the early morning DCE session but since retreated after the close. Jun also traded down from 104.5 to 104.1. (FIS)