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Iron ore prices are trading higher with benchmark Iron Ore Fines 62% Fe Futures (CME) settling on $85.70 (as on 28th March 2019), and Dalian Commodity Exchange (DCE) Iron Ore 62% Fines settling on RMB 632 (as on 29th March). The high iron ore prices are largely due to the fall in Chinaâs Iron ore domestic inventory, which reported at 135.75 million tonnes (for the week ended 29th March). Apart from the falling inventory, the domestic mills in China are procuring iron ore to take advantage of high steel prices in the domestic market. Steel products such as steel Rebar and hot-rolled coil steel marked a closing at RMB 3950 (as on 22nd March) and RMB 3880 (as on 22nd March), which was 0.82% and 1.84% high as compared to their previous close respectively. Iron ore prices are currently spiking as domestic mills in China are procuring more iron ore to take advantage of high steel prices in the domestic market, and iron ore inventory in China is falling, which might see a high import of iron ore in China. In the recent event, the worldâs second-largest iron ore producer Rio Tinto declared a production loss for the year 2019 amid damage caused by the Tropical Cyclone Veronica on the companyâs operation location in Pilbara region. Rio Tinto (ASX: RIO), the worldâs second-largest iron ore miner announced on 1st April 2019 that the company uncovered some damages at Cape Lambert, which is a port facility in the Pilbara region, after a recent Tropical Cyclone Veronica passed through the region. The company also announced that its operations in the Pilbara region are resuming progressively; however, the damage revelled after an inspection to the port facility forced Rio to declare force majeure on certain contracts. The port with a loading capacity of 85 million tonnes, sustained damages amid the cyclone and fire incidence which broke out in January 2019; however, as per the company, it is taking remediation work on a priority basis. Rio announced an estimated production loss of approx. 14 million tonnes of iron ore in 2019 amid supply disruption caused by the damage on the port facility and the company also declared that the shipments in 2019 are expected to be at the lower end of 338 and 350 million tonnes. Cape Lambert majorly ships Hamersley Iron Yandicoogina (HIY) and Robe River products, and the company shipped 57.4 million tonnes of the Hamersley Iron Yandicoogina and 32 million tonnes of Robe River Products in 2018. The damage on the port is expected to reduce the shipment of both the products. Rio also operates in Port Hedland, where the port authorities have banned the ship-loading activities due to high tide in River Turner caused by the regional rainfall along with Topical Cyclone Veronica. A production loss from Rio might help competitor Vale and BHP to dive in and realise current high iron ore prices in the global market.
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