Iron Ore Up Again on Further Brazilian Production Cuts

Iron ore prices are up again as fresh news of further Brazilian production cuts filter through the market. As per Business Insider, Benchmark 62% fines are now at their highest level in a month after gaining 2% to trade at $88.26.

Meanwhile, 58% fines are now sitting at a level not seen since September 2014, following a modest gain of .2% to trade at $70.49.

65% fines also gained .5% to trade at $98.

Picking the overall trend here is tricky as each bit of news out of Brazil has shifted the market, despite the various factors internal to China.

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Further production cuts impacting iron ore price

As Reuters reports, Vale SA said on Saturday that it would be cutting production at a mine in Minas Gerais that has an annual capacity of 12.8 million tonnes.

This is in addition to the temporary closure of a number of other mines which is expected to impact 70 million tonnes a year of capacity.

The new number is close to 83 million tonnes of expected capacity and 5.7% of the seaborne market, according to analysts from Jefferies.

Meanwhile utilisation rates at steel mills declined again last week, hitting 62.29% as of 15 March, Reuters reports via Mysteel.

Iron ore miners currently benefitting from news out of Brazil

Vale’s loss has been a boon for miners such as Rio Tinto Ltd [ASX:RIO], BHP Group Ltd [ASX:BHP] and in particular, Fortescue Metals Group Ltd [ASX:FMG].

Rio and BHP are near 52-week highs, and FMG continues to scale new heights.

Previously, we have suggested that ongoing pollution issues could benefit 65% fines in the long run, meaning that companies pushing higher grades may see a more sustained run.

We have also suggested that for this reason Mount Gibson Iron Ltd [ASX:MGX] may continue to outperform.

Here is a snapshot of their Koolan Island site, which the company is targeting first ore sales from at the end of this month:

Iron Ore

Source: newswire

In our next iron ore update, we will look at another smaller iron ore miner that could follow a similar path to Mount Gibson Iron.


Lachlann Tierney,
For Money Morning

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Lachlann Tierney is an Analyst for Money Morning and has been investing for nearly a decade. With a Masters of Science from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest their money wisely. Recently he has been working with Ryan Dinse. Lachlann is involved in two publications:

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