Another record-breaking week for iron ore prices as they hit and passed through a succession of five year plus highs last week.
While they traded rangebound on Friday amid growing concerns over weakening profit margins of Chinese steelmakers, prices still managed a 6% weekly gain – after the 10% jump of the week before.
The Metal Bulletin 62% Fe Iron Ore Index fell 27 cents to $US116.98 a tonne on Friday, the highest close since mid-2014.
That was up from $US110.30 a tonne the week before. The price for 62% ore touched a five year high of $117.26 on Thursday.
Among the big miners, Rio Tinto shares fell 3.6% after downgrading its iron ore production forecasts for 2019 for a second time this year because of production problems in the Pilbara.
Rio could lose up to 23 million tonnes of production and sales this year because of the quality and production difficulties at its Brockman Hub operation in the Pilbara.
While BHP shares edged up 1.8% over the week to $41.03 and Fortescue shares ended 0.8% higher at $8.87, there’s a growing expectation that the surge in prices might be close to peaking, given that Brazil’s Vale is about to bring another 22 million tonnes of ore production back on stream at its Brucutu mine in its southern mining complex.
Court decisions had stopped Vale from using its wet processing system at Brucutu after the January 25 dam wall collapse and tragedy. Vale won higher court approval last week to restart operations at the mine, adding 22 million tonnes to 8 million tonnes or so (annual capacity) dry processing operation.
Vale also reaffirmed its 2019 iron ore and pellets sales guidance of 307-332 million tonnes, as per previous announcements.
The company said the final figure is likely to be close to the midpoint of that range (around 315 million tonnes).