Chinese iron ore futures jumped to their highest in more than a year on Monday after a dam collapse at a Vale mine in Brazil, which has killed at least 58 people and left hundreds missing, fuelled concerns over constraints on Brazilian exports of the commodity to China.
Iron ore futures on the Dalian Commodity Exchange were 3.7 per cent higher at Rmb555.5 ($82.51) by early afternoon in Hong Kong, according to Bloomberg data. They had earlier jumped as much as 6 per cent to Rmb567.5 – the highest since September 2017, according to Reuters.
“The price jump this morning is primarily driven by the Vale tailing dam rupture,” said Ming He, a senior manager at Wood Mackenzie. He added:
There are concerns on its impact on the export from Brazil as a whole, not just on Vale but also other side effects such as the potential Samarco restart. Iron ore imports from Brazil is substantial to China.
However, the short-term concern is around the possibility of overhauls of iron ore mines and associated curtailment of supply. This might also result in the uncertainty of the Samarco restart.
Vale had been preparing to resume operations at Samarco, another iron mine in Brazil, which saw Brazil’s biggest environmental disaster in 2015 when dams holding waste material broke.
source: ft |
