Iron ore futures in China, the world’s top buyer of the steelmaking raw material, dropped to their lowest in more than two weeks on Tuesday after Brazilian miner Vale SA reported higher output in the third quarter.
Concerns about iron ore demand slowing in China, which makes about half of the world’s steel output, due to its renewed efforts to curb pollution by restricting steel mills operations in some areas also weighed on prices.
Dalian Commodity Exchange’s most-traded iron ore contract fell as much as 3.3% to 630 yuan ($89.12) a tonne, its weakest since Sept. 26. It was down 2% by 0312 GMT.
Vale, the world’s top iron ore exporter and China’s major source of high-grade material, on Monday reported a 35.4%quarter-on-quarter jump in output to 86.7 million tonnes in the July-September period.
The miner also said it expects to lift production capacity to around 50 million tonnes at its Vargem Grande complex by the end of 2021.
A deadly tailings dam burst at Vale’s Brumadinho complex in January prompted several dam and mine shutdowns for safety checks, tightening global supply and pushing iron ore prices to five-year peaks.
China’s spot 62% iron ore benchmark, which was steady at $92.50 a tonne on Monday, is still up 15% this year despite a 27% slump from its July 3 peak of $126.50 amid easing supply concerns, based on SteelHome consultancy data.
Improving iron ore supply from Brazil and Australia has pushed port inventory in China to a five-month high of 129.95 million tonnes, latest SteelHome estimates showed
That improvement was reflected in China’s iron ore imports, which rose for a third straight month in September to a 20-month high, according to customs data released on Monday.
“For 2020, Vale expects to produce an additional 30 Mt (million tonnes) from the halted operations related to the Brumadinho tragedy,” the miner said.
* Other steelmaking raw materials also slumped, with Dalian coke slumping as much as 4.5% to 1,769 yuan a tonne, its lowest since Dec. 3, 2018.
* Dalian coking coal slipped as much as 1.8% to 1,224 yuan a tonne.
* The most-traded construction steel rebar on the Shanghai Futures Exchange fell as much as 2.3% to 3,325 yuan a tonne.
* Hot-rolled steel coil, used in cars and home appliances, dipped as much as 2.2% to 3,301 yuan a tonne.
* Stainless steel, made from nickel pig iron, slumped as much as 3.9% to 15,165 yuan a tonne, tracking Shanghai nickel’s sharp decline.