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Image: Vale
The benchmark 62% Fe import price including freight and insurance at the Chinese port of Tianjin added $1.20 or 1.9% to $65.10 a tonne according to data provided by The SteelIndex, the highest since January 23. High grade 65% Fe fines at the port of Qingdao were also up sharply rising to $74.10 a tonne, a 1.6% improvement.
Benchmark prices have now recovered more than 39% since hitting record lows at the beginning of April after entering 2015 just above the $70 a tonne level. The iron ore price peaked above $190 a tonne in February 2011.
The latest gains came after positive comments from Vale Chief Executive Officer Murilo Ferreira at a conference in the Brazilian giant’s home base of Rio de Janeiro about the supply outlook:
According to Bloomberg Ferreira said imports by China, which already consumes more than 70% of the seaborne trade, will increase as domestic capacity of around 200 million tonnes are forced out of the market:
“Several Chinese producers – a higher number than people realize – have already left the business. I think we will have a better second half in China than the first half in terms of steel.”
Ferreira expects the seaborne market to grow 3.6% to 1.44 billion tonnes this year.
The Brazilian giant also announced it’s making deep cuts to capital expenditure, slashing investment in new projects by $5 billion this year compared to 2014. By 2018, Vale would only allocate $4 billion for investment spending versus $14 billion last year.
Last month number three producer BHP Billiton said it’s putting on hold expansion at its export terminal in West Australia.
Led by Vale (NYSE:VALE) with a 6.2% advance shares in the big three producers showed strong gains in New York trade on Wednesday adding billions to their combined market value of some $250 billion.
American depository receipts of Anglo-Australian giants BHP Billiton (NYSE:BHP), Rio Tinto (NYSE:RIO) added to gains in London jumping more than 3.4% and 3.8% respectively.
Earlier number four producer Fortescue Metals Group (ASX:FMG) missed out on the rally dropping 2.5% in value on the Sydney Stock Exchange while shares in Anglo American (LON:AAL) ADRs in New York added more than 4%.
SEE ALSO: Iron ore is not in oversupply
Blame oversupply of fines for the slump in the price says new report. Global pellet, lump and concentrate production have been stable since 2010.
Comments
John
Vale is the one bright spot in a bad turn down. They don’t quit. JFB