Metal Bulletin Iranian Iron Ore index

Metal Bulletin Iron Ore 60% Fe Iranian Fines Index

Market Commentary

Iron ore prices have broadly stabilised over the past few days after the battering they took last week. Iranian iron ore prices reflected this and actually held up better than those of some other origins. This shows in the differential to the MBIOI-62 which, after widening quite significantly last week, narrowed this week to $4.59/t.

 

The most significant industry news from the past week has been the catasrophe at pellet producer Samarco's operations in South-Eastern Minas Gerais state, Brazil. Samarco's tailings dam at its Germano iron ore mine ruptured on November 5, flooding nearby settlements and leading to at least 15 deaths, according to local media reports. Samarco has three concentrators at the Germano mine and three slurry pipelines linking the site to the company's pelletizing plant 400km away at Anchieta city in Espirito Santo state.A 50:50 joint venture between Vale and BHP Billiton, Samarco has a nominal production capacity of 30.5 million tpy of pellets, from four pelletizing lines – supplying about one-fifth of global pellet supplies.

 

The impact of the tragedy will likely have an affect on international pellet premiums, as the operation could be shut for some time. Deutsche Bank is assuming a stoppage until 2019, while CLSA ie expecting a shutdown of six to 18 months. As Samarco control some 20% of the global 110 million tpy pellet market, many industry analysts are expecting a noticable rise in pellet premiums. Metal Bulletin's research division (MBR) expect the effect to be felt most intensely in the MENA region, where Samarco is a key supplier of DR-grade pellets.

 

Key market data this week indicated a weakening of Chinese demand for iron ore. China's iron ore imports fell by 5% year-on-year in October as demand from the world's biggest consumer waned amid a weak steel market. The country imported 75.52 million tonnes of iron ore last month, compared with 79.39 million tonnes a year earlier according to customs data released on November 8. October’s imports were also down 12.3% from the country’s intake of 86.1 million tonnes in September. Total imports for the first ten months of this year amounted to 774.51 million tonnes, largely flat with year-earlier levels.