Global iron ore prices firmed on Monday after the giant Brazilian miner, Vale, slashed its 2020 guidance for iron ore fines and pellets.
The cut removes 20 to 25 million tonnes from global iron ore supplies this year, on top of the 6 million tonne cut by Rio Tinto because of damage caused by Cyclone Damien in February in its Pilbara iron ore mining operations.
Vale’s news saw the price of 62% Fe fines delivered to northern China rose by around 1.6% to $US87.45 a tonne.
Vale reduced its forecast for annual production of iron ore fines to 310 million to 330 million tonnes from 340 million to 355 million tonnes previously, while its forecast for pellet production was cut to 35 million to 40 million tonnes from 44 million tonnes.
That was after Vale revealed output fell by 18.2% year on year in the first quarter of 2020 from the same period in 2019 when they were hit by the January 25 mine tailings dam wall collapse disaster.
Iron ore fines production came to 59.6 million tonnes in the January-March period, down from 72.87 million tonnes the year before, and just under the company’s previous guidance of 63-68 million tonnes (which was down on a previous forecast.
Vale’s iron ore and pellet sales fell to 58.97 million tonnes in the first-quarter 2020, down from 67.73 million tonnes in the first quarter of 2019.
The company’s results were lower than it had expected because of unplanned maintenance at Vale’s S11D iron ore operations, heavy rainfall in the country and lower production from mining operations in Brazil’s southeastern region.
