China’s iron ore futures jumped more than 2 percent on Tuesday after Vale SA, the world’s largest iron ore miner, lowered its production outlook for the steelmaking raw material.
Dalian Commodity Exchange’s most-traded iron ore contract, with January 2020 expiry, rose as much as 2.2 percent to 654.50 yuan ($92.98) a ton, recovering after a 0.8 percent decline in the previous session. It was up 2 percent.
On the Singapore Exchange, the front-month January 2020 iron ore contract was up 0.6 percent at $86.88 a ton.
Vale said on Monday it would slash output from its Brucutu mine in Brazil for up to two months as it evaluates the stability of the nearby Laranjeiras dam. The move will leave Brucutu, Vale’s biggest mine in Minas Gerais state, operating at 40 percent of normal capacity.
As a result, Vale lowered its iron ore production outlook for the first quarter of 2020 to a range of 68 million to 73 million tons from a previously announced range of 70 million to 75 million tons.
The revised outlook comes at a time iron ore inventory at ports in China, the world’s biggest steel producer, has slumped to the lowest in nearly 10 weeks, while steel demand remains firm amid Beijing’s sustained policy support for the slowing domestic economy.
“As (China’s) winter production control is less severe than last year and steel demand remains solid due to government’s support policies, we expect the steel prices to rise further, underpinning further recovery in iron ore and coking coal prices,” said Helen Lau, metals and mining analyst at Argonaut Securities. — Reuters
