Vale, the world’s top iron ore miner, will probably ship more iron ore to China in 2020 than 2019 especially when the demand from the steel mills outside China may reduce because of the pandemic, according to a post on the website of the China Iron and Steel Association (CISA) on June 2.
The estimation was shared by Luiz Meriz, Global director of iron ore sales of Vale, when having a telephone call with Wang Yingsheng, deputy secretary general of the CISA on June 1.
Meriz also confirmed that no mining operations have been affected by COVID-19 so far and the company has been taking various measures to fight against the pandemic, and it has no intention to revise down its iron ore production guidance for 2020.
The remarks have in essence denied the market speculation towards the end of May that Vale may be forced to further trim its production guidance, and as of now, Vale’s iron ore fines production guidance for 2020 remains at 310-330 million tonnes, Mysteel Global notes.
Since late last week, There has been renewed market concern on global iron ore supply for the rest of 2020 especially from Vale because of the fast spread of the pandemic in Brazil, and Mysteel’s SEADEX 62% Fe Australian Fines, accordingly, surged to its 10-month high of $101.05/dmt CFR Qingdao as of May 29, and the price eased just by $0.5/dmt to $100.55/dmt as of June 1.
As of June 1, Brazil ranked the second in terms of confirmed COVID-19 cases only after the U.S. with 498,440 cases including 28,834 deaths, according to statistics from the World Health Organization.
Despite the latest reassurance from Vale, it may take some time to convince the iron ore market sources with the actual shipment volume in the coming months.
“Personally I think iron ore prices may still hover high in the near future, if not because of supply, then because of the demand or as long as Chinese steel mills do not slow down their production,” a Shanghai-based iron ore analyst commented.
An analyst from Southeast China’s Fujian also holds the “seeing is believing” attitude, waiting to see whether Vale’s iron ore shipment volume to china will really grow.
“China’s demand has been up, so we will have to see where the balance will end in the fundamentals, ” he added.
By the end of May, the blast furnace capacity utilization rate among China’s 247 steel mills shot up for 11 weeks to 91.38%, which was also 1.6 percentage points higher on year, according to Mysteel’s data, and it has been a rather high level against the sustainable and healthy 80-85% in common understanding, Mysteel Global notes.
On June 2, the most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) still hovered at its year’s high level, closing the daytime session at Yuan 757/dmt ($106.3/dmt), up Yuan 0.5/dmt from the settlement price of June 1.
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
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