Recently, iron ore prices have experienced a roller coaster. The iron ore price released by the China Iron and Steel Association is an index. On February 15, the onshore price of 62% grade dry-based powder ore directly imported iron ore was 85.84 US dollars / ton (ie 1.3845 US dollars / ton), per ton The decrease was 0.12 US dollars, a decrease of 0.14%, and the average price of the month was 86.80 US dollars / ton. The price fell slightly for three consecutive days.

During the period after the Spring Festival holiday, iron ore became a star product in the futures and spot markets, causing widespread concern.

Wreckage in the Vale caused iron ore market concerns

On January 25, 2019, the world's largest iron ore producer Vale was located in the Feijo iron mine in Brumadinho, Minas Gerais, Brazil. The Paraopeba project of Feijo Iron Mine produced 26.3 million tons of iron ore in 2017, accounting for 7% of the total production of 366.5 million tons of Vale. Vale CEO announced that it will temporarily shut down production facilities in the relevant tailings dam area, including all five mines in the Paraopeba complex in Feijo, four mines in the Vargem Grande complex, and two pellet plants, which are expected to affect at most Annual production of 40 million tons of iron ore.

According to the International Iron and Steel Association data, global iron ore production reached 2.163 billion tons in 2017, and the output of four major iron ore enterprises, namely Vale, Rio Tinto, BHP Billiton and FMG, accounted for 1.07 billion tons.

Vale is the world's second largest mining company and one of the world's largest suppliers of iron ore (mineral sands) and one of the main negotiators for global iron ore price negotiations. The total production of Vale accounts for 80% of Brazil's iron ore production and has a higher grade of iron ore resources.

On February 4th, the Brazilian court demanded that Vale be suspended from production at the Brucutu mine in Minas Gerais. The Brucutu mine is the largest mining area in the state, with an annual production capacity of about 30 million tons of iron ore. Brazilian regulators have recently revoked their business license for the Brucutu mine in Vale.

On February 5, Vale officially announced that it will suspend the production of the concentrator of the Vargem Grande project to speed up the shutdown of the tailings dam. The project will produce about 13 million tons of iron ore per year, which is the company’s previously announced reduction of 40 million tons. Part of the production plan.

On February 6, Vale announced a temporary shutdown due to production at the Brucutu mine.

On February 17, local time in Brazil, Vale registered and evacuated 110 people in New Lima Macacos, 25 km from Belo Horizonte, Minas Gerais, Brazil. This is the Mar-Azul mine B3. Part of the precautionary measures specified in the /B4 Dam Mining Dam Emergency Action Plan (PAEBM). In the case of professionals in the presence of professionals, Vale conducted inspections of the dam B3/B4 around the clock.

The oversupply situation in the iron ore market has not changed much.

China Steel Association said that China imported a total of 1.064 billion tons of iron ore in 2018, a decrease of 10.22 million tons from the previous year, of which 205 million tons of iron ore were imported from Brazil, accounting for about 20% of China's total imports, down 1300 from the previous year. About 10,000 tons. According to several international agencies, the dam-breaking incident affects the annual output of iron ore in the Vale, 40-60 million tons, accounting for only about 5% of China's annual imports. Reduced production in Brazil's Vale and high-silica mines can be offset by imports from other countries and regions. In 2019, China's steel industry needs to further promote supply-side structural reforms, continue to consolidate the results of de-capacity production, and steel production continues to grow substantially less likely. At the same time, as scrap consumption increases, demand for iron ore is further reduced, and later iron ore prices It is also difficult to rise sharply.

China's iron ore dependence on Brazil's iron ore dependence is also declining. In 2018, China's imports of iron ore from Australia and Brazil accounted for 89.5% of the total arrivals, of which Australia's iron ore arrivals reached 724 million tons, an increase of 1% year-on-year, and Brazil's iron ore arrivals reached 205 million tons. Reduced by 6.4% year-on-year.

Wu Zhi, chairman and general manager of Steel House, told the China Metallurgical News that the Feijo iron ore dam has an impact on the domestic iron ore price. 20% of the iron ore in the Vale is exported to China. The ore gap official did not provide specific data, so it is not certain how much impact, of course, iron ore price increases also have his factors, such as the exchange rate between the renminbi and the Australian dollar.

"At present, the price of iron ore is a virtual high. Iron and steel enterprises with sufficient iron ore stocks should not rush to replenish mines in the near future. They should replenish mines according to demand." Wu added: "In general, short-term iron ore prices will not Too much rise, the event led to a decline in global iron ore supply expectations, and the price of iron ore supply from loose to tightly balanced iron ore will rise in the later period."

Zhu Junhong, chairman of Shanghai Ganglian E-Commerce Co., Ltd., said in an interview with China Metallurgical News that in the long run, the follow-up impact of the dam breach on the environmental protection and safety costs is far from over. The tail dam is now likely to have many potential problems. On February 17, Vale evacuated the residents around a dam. The overall incident has been determined to affect the annual annual supply of at least 40-50 million tons. Continued fermentation does not rule out the continued reduction of supply, and raises the problem of tailings treatment in all mines around the world, that is, the environmental and safety costs of iron ore mining will definitely increase significantly, and tailings treatment before new mine production The problem will lead to more strict greenfield links, and the mining cost and production process will be greatly lengthened. 

At present, some of the projects that can be supplied to the market, such as some of the projects in China, will be unable to deal with the tailings. The government reached a compromise to stop production, or because the tailings treatment costs have increased significantly, and then relapsed into trouble, so the second quarter Beginning, it may affect the ability to gradually reflect, to look at the specific impact of inventory changes to track mysteel Sea Outer Harbor-connector, now with inventory