They have a common opinion that not only a shortage of iron ore is expected in the near future, but also of pellets. They came to this conclusion after a significant reduction in the production of a steel-making component by its largest producer.
At the end of January, one of the most significant mining companies in the world - Brazilian Vale S. A. was forced to sharply cut production after the collapse of the tailings dam. As a result, 150 people died and part of the city was destroyed. The company has widely decommissioned dams of a similar design. This meant a 40 million tonnes reduction in the company's annual production. Production fell by another 30 million tonnes following a court decision to halt operations at the Brucutu mine. Vale's contracts were affected by force majeure.
Gonsalves said the impact on the iron ore market of the catastrophic events at Vale has not yet been fully appreciated.
Since January 24, prices per ton of ore have increased by at least $ 15. As a result of fears that the crisis in Vale will lead to a reduction in ore supplies, there is a peak growth in futures for it.
