Iron Ore Futures Skyrocket After Brazilian Dam Disaster
Yicai Global
/SOURCE : yicai

(Yicai Global) Feb. 21 --  China's iron ore futures contract surged 8 percent -- the daily limit up on the Dalian Commodity Exchange -- after the week-long Spring Festival holiday ended yesterday. These futures reached USD96.60 per ton, a record since March 2017. They have risen about 22 percent since Jan. 25, hitting multi-month peaks in consecutive days during the week in the lead-up to the vacation.

Worries over world supplies worsened during the holidays as Rio de Janeiro-headquartered Vale, the world's biggest iron ore producer, said it is invoking force majeure clauses to excuse its performance on several iron ore sales contracts on Feb. 5, after saying it will shut 10 percent of its capacity – that's about 40 million tons of iron ore per year – to improve mine safety.

The market fears the ore giant may temporarily shutter more capacity to meet regulatory requirements, with Citigroup already having raised its projected iron ore price 40 percent to USD88 for this year. Brazil's mine watchdog ordered Vale to halt operations at its Corrego do Feijao mine following a deadly tailing dam collapse there on Jan. 25. The breach near Brumadinho in the State of Minas Gerais about 437 kilometers north of Rio de Janeiro unleashed a torrent of mud that swept through Vale's mine facilities and a nearby community, killing 165 people and leaving hundreds missing.

Editor: Ben Armour 

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Keywords: Iron Ore , Brazil