For the first time in nearly a month, the spot iron ore price registered a back-to-back increase overnight.
According to Metal Bulletin, the spot price for benchmark 62% fines rose by 34 cents, or 0.7%, to $48.58 a tonne. It was the largest percentage gain since October 27, and the first time since October 12 that it increased for a second consecutive session.
While the benchmark spot price rose, Chinese iron ore futures continued to soften with the most actively traded January 2016 contract on the Dalian Commodities Exchange falling 0.29% to 346 yuan.
In the wake of the Simarco mine disaster in Brazil last week, it appears that production at two nearby iron ore mines, both operated by Vale, may be impacted as a consequence.
“Preliminary assessments from Vale have also suggested that its iron ore production may be affected at two mines near the Samarco dam disaster,” wrote analysts at Metal Bulletin in a note released overnight.
“Output will possibly decrease by 3 million tonnes in 2015 and by 9 million tonnes in 2016 at the Fábrica Nova and Timbopeba mines in the miner’s southeastern mining system. In addition, the company will stop the sale of run-of-mine (ROM) material from its Fazendão mine to Samarco. These preliminary assessments may change as other alternatives are explored, however, according to the Brazilian miner.”
Some, including Goldman Sachs, suggest the disaster may see the benchmark spot price push back up to $50 a tonne on tightening supply.
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