Iron ore’s supply-driven rally picked up pace on Wednesday, with futures topping $90 a ton, amid increasing concern the crisis at Brazil’s Vale SA will be drawn out as regulators ordered dozens of dams to be shut.
Futures for benchmark material rallied as much as 4.1 percent in Singapore, while spot ore climbed to a two-year high and the contract for high-grade ore extended gains above $100 a ton. Barclays Plc raised price forecasts on expectations for a global deficit.
The seaborne market has been roiled this year after top producer Vale suffered a dam breach in January, spurring mine suspensions and concerns there’ll be a shortage.
The catastrophe drew increased scrutiny on mining practices from the authorities, with the nation’s regulator now ordering 56 tailings dams to be closed. Iron ore’s rally has been given an additional boost as a cyclone in Australia disrupted flows from Rio Tinto Group and BHP Group.
“There’s no doubt that events in Australia have a short-term impact as, after all, supply has dropped,” CRU Group analyst Richard Lu said via WeChat.
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