Brazil’s deadly coronavirus out break has disrupted global supplies in iron-ore just as demand from China is revving up, pushing prices to a seven-month high.
Iron ore is is one of the most heavily traded metals and used in everything from building to cars. Front-month futures or the ore jumped by 10% to nearly $107 a metric ton on Wednesday at China Dalian Commodities exchange., it highest closing since October 2019.
Prices have risen 20% since early April, driven by squeezed supplies from Brazil which dominate the iron-ore mining industry alongside Australia.
The iron -ore market has been remarkably robust, said John Meyer, head of research at SPAngel, a brokerage for small mining companies in London. ‘The steel producers in China slowed things down during the lockdown but have been pretty quick in getting back-up to producion.
Higher iron-ore prices add to pressure on profits at steelmakers globally but is a boon for miners. Rio Tint, one of the worlds top exporter of the ore said that an extra $10 per tone of iron -ore generates $2Billion in free cashflow.
Brazil exported 15.27 million metric tons of iron-ore in the first three weeks of May, down from 19.4million tons in the comparable period in 2019.
The pandemic had caused difficulties at the country’s mine, which are more labour -intensive and require people to work closer together than mines in Australia. Miner, Vale S.A had said the corona virus will reduce the amount of iron it is able to produce this year.