Global iron ore prices leapt a surprisingly strong 5% on Friday as doubts re-emerged about the security of Brazilian iron ore supplies in the wake of the continuing spread of COVID-19 across that country.
The Metal Bulletin price for 62% Fe fines delivered to northern China jumped $US4.25 a tonne on Friday to end the week at $US88.60.
That pushed the price of iron ore up by more than 5.4% for the week.
Traders reported that the rapid spread of the virus to the northern iron ore producing Para state of Brazil triggered concerns late last week.
There have been no reports as yet of infections near the iron ore mining areas and port, but concerns are rising.
The Brazilian national and Para state governments have decreed mining, processing, commercialisation, and shipping essential operations, so they will continue if there is a lockdown.
But traders point to how iron ore exports from India and South Africa and Iran were shut down by the COVID infections which reduced iron ore supplies at a time Brazil’s supplies were being impacted by bad weather and flooding.
Para state is home to the Carajas iron ore mine that forms part of Vale’s Northern System operations.
Ore produced at Carajas, including the flagship high-grade brand Iron Ore Carajas (with a 65% Fe content), is shipped to global markets through the Ponta da Madeira terminal, located in Maranhao.
The sharp price rise came a day after Chinese trade data for April revealed a jump in shipments for last month.
Customs data showed that 97.27 million tonnes were imported last month, up from 85.91 million tonnes in March and 80.77 million tonnes a year earlier, when shipments from Brazil’s top miner Vale were disrupted after a tailings dam disaster on January 25.
In fact imports in April of 2019 hit an 18 month low because of the shortfall from Brazil.
In the first four months of 2020, China imported 360 million tonnes of iron ore, up 5.8% from 340.21 million tonnes in the same period last year, according to customs.
That’s a sharp rise in the pace of imports from the 1.3% increase reported for the first quarter.