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Platts IODEX 62 percent Fe fines assessed at $127.30/dry mt CFR China on Jan. 7 from a 2021 low of $87.20/dmt on Nov. 18 have rallied in the recent two months. A rapid shift in demand and steel market circumstances in China pushed cargo bidding down, resulting in a record high price in early 2021, until a resurgence in forward demand since December.
In the fourth quarter of 2021, China’s output was adjusted to more effective steel production plans and stimulus. This resulted in increased demand for iron ore. Demand for seasonally low first-quarter supply, along with high global steel prices, may have contributed to price increases, even as worldwide production and volume outlooks remained unchanged.
The Brucutu and Mariana complexes and a stretch of the Estrada de Ferro Vitoria a Minas railway for transporting ore to Tubarao, have been affected by the suspension of the Estrada de Ferro Vitoria. The second most significant supplier of iron ore to China is Brazil. In the first nine months of 2021, Vale’s Southern and Southeastern Systems accounted for about 40% of the company’s iron ore output. Port terminals in the southern Brazilian region of Vale are accustomed to dealing with frequent train interruptions for iron ore shipments, and the company has three significant facilities in the area.
Specialized iron ore products and segments for operational efficiency and blending and pollution control have become increasingly familiar to Chinese and foreign customers. BRBF fines, a combination of low alumina iron ores and grades from Brazil, are processed into concentrates at the port. Vale stated on Jan. 10 that it was keeping its 2022 production projection of 320 million-335 million mt after an assessment of its bigger northern Brazil Carajas-based plant. In a report published on Nov. 29, Vale predicted that it would generate between 315 million and 320 million metric tons (mt) of iron ore by 2021.
In addition to rain and cyclones in Australia and winter weather in Canada and Russia, the wet season may significantly influence activities in Brazil. Often cheaper and more easily accessible in the early months of the year. Iron ore exports from terminals in Rio de Janeiro state, where Vale’s Southern System iron ore facilities are typically located, have been temporarily suspended, the firm has said. Two pellet facilities are part of the Southern System: Fabrica and Vargem Grande. Since 2019, Fabrica has not been operational. As well as providing steel mills in Brazil with the raw materials they need to produce the steel, they sell it for export to countries like China.
By 2022, Vale will produce 34 million to 38 million metric tons of pellets across its operations in Brazil and Oman before scaling up to 50 million metric tons in 2023. Vale’s more comprehensive Southeastern System network of mines and beneficiation units supplies high-grade pellet feed for plants in Tubarao, Vitoria, and Asian ports. However, despite Brucutu’s inactivity, the Itabira complex was not impacted at the time, according to Vale.
An iron mining executive in Belo Horizonte, Brazil, stated early on Jan. 10 that heavy rains affected iron ore supply in the southeast of the country. Mining operations by Anglo American and Samarco, the joint venture between Vale and BHP to produce pellets from iron ore from the state of Minas Gerais, both rely on their ore pipelines for transportation to the coast, where they may be exported. According to a source familiar with Samarco’s operations, the rains have had little effect on output. Minas-Rio had been unaffected, according to Anglo. There was no quick word from Samarco on this.
Trafigura did not respond to any of the trading group’s operations in Brazil related to iron ore mining, origination, and shipping. Exports of iron ore sinter fines from the Impala Terminal in Porto Sudeste, Minas Gerais, Brazil, are handled by Trafigura. Following Brazil’s Brumadinho and Mariana catastrophes, the government has imposed more stringent examinations and classifications on sites to prevent future disasters.
According to the company, Vale maintains continuous real-time surveillance of its dams, and no new data has led to any changes in the emergency categorization of any of its facilities. PAEBM, or the Emergency Action Plan for Mining Dams in Brazil, is used to classify the emergency status of the country’s tailings dams. When National Mining Agency examinations demonstrate that the dam is at variable risk of breach, a more severe categorization might affect activities.
Heavy rains in the area prompted mining company Usiminas to reactivate the Central Dam’s PAEBM, inactive since 2014. According to the report, although it was described as an early level of alert, it did not imply that the dam’s safety had been compromised.