Iron Ore’s Brazilian Rain Dance Looks Premature
Vale’s weather-affected first quarter is a thin salve for the hit to demand from the China coronavirus outbreak.
A year of disruptions.
Photographer: MAURO PIMENTEL/AFP/Getty Images
Good news has been in short supply for iron-ore markets since China began shuttering swathes of the economy to contain the coronavirus outbreak. Prices gained after Vale SA offered a thin salve Tuesday, saying first-quarter output will be lower than previously anticipated because of heavy rains in Brazil. The market may be cheering a little too soon.
Iron-ore supply was supposed to return to normal this year, after 2019 was marked by disruptions including a fatal accident at one of Vale’s dams and a tropical cyclone in Australia. The Brazilian heavyweight and Rio Tinto Group, which vie to be the world’s biggest shipper of the steelmaking ingredient, both plan to increase production. The prospect of higher supply was reflected in Australia’s quarterly forecasts, published in December, which saw prices easing to $60 per metric ton by 2021 — more than a fifth below 2019’s elevated average.