The Latest Updates From the Vale Dam Disaster in Brazil
Dump trucks transport carry mined iron ore at Vale SA's Brucutu mine in Barao de Cocais, Brazil.
Photographer: Dado Galdieri/Bloomberg
Iron ore rallied toward a two-year high after Vale SA declared force majeure on some contracts, raising worries of a global shortfall of the key steel-making ingredient. Australia & New Zealand Banking Group Ltd. is now forecasting a production deficit in 2019, compared with surplus of 15 million tons before Vale’s dam disaster in Brazil.
The rise in prices will boost free cash flow at iron ore producers Rio Tinto Group and BHP Group, UBS Group AG analysts said in a note dated Tuesday. Meanwhile, steelmakers already contending with prospects for slower global demand may face a profit squeeze. ArcelorMittal is expected to report bumper profits when it publishes full-year results Thursday, but investors will be looking at how confident steelmakers seem about passing through rising raw-material prices, said Colin Hamilton at BMO Capital Markets.