Bloomberg: Top Iron Ore Shipper warns Vale disaster will be.
Top Iron Ore Shipper Warns Vale Disaster Will Be Felt for Years By Krystal Chia (Bloomberg) -- Australia slashed its forecast for global iron ore trade this year and warned that the effects of a fatal dam disaster in Brazil may curtail supply for at least five years. The Jan. 25 accident at a Vale SA operation in Brazil and subsequent closure of several tailings dams may cut global seaborne supply by 46 million tons this year and about 25 million tons annually through to 2024, according to a quarterly report by Australias Department of Industry, Innovation and Science. Prices over the early part of that period will be at least $5 a ton higher than they would without the curtailments in Brazil, it said. The department cut its forecast for Brazilian exports 14 percent to 370 million tons this year and lowered its forecast for Australian shipments 1.4 percent. Total world trade will be 1.53 billion tons this year, down from a December forecast for 1.64 billion tons. *T ================================================================ Forecasts in | | | | | | million tons | 2019| 2020| 2021| 2022| 2023| 2024 ================================================================ Brazil iron | | | | | | ore exports | 370| 388| 403| 404| 405| 406 Australia | | | | | | iron ore | | | | | | exports | 867| 864| 888| 906| 903| 902 Total world | | | | | | trade | 1,530| 1,530| 1,528| 1,532| 1,529| 1,527 *T Iron ore has been roiled since the disaster thats prompted Vale to shut almost 93 million tons a year of output, with markets no clearer on the outlook for supply after the miner didnt provide full-year guidance in its production report this week. Thats spurred forecasts for a deficit after rival producers BHP Group, Rio Tinto Group and Fortescue Metals Group Ltd. warned they cant easily ramp up output. The Vale dam collapse is expected to decrease seaborne supply, and inventories are expected to decline in 2019, as steel makers blend in lower priced ores to help buffer profit margins, the report said, referring to operations in China. Lower supply will be partly offset by weaker demand for seaborne iron ore, stemming from a modest decline in steel production in China. China Demand While Chinas steel output is set to decline, it will remain at historically high levels, according to the department. The countrys consumption will hold steady this year as economic stimulus boosts demand and offsets weakness in the automotive and machinery sectors, it said. Both production and demand will then gradually decline. An increase in scrap consumption will weaken demand for iron ore imports in the worlds top buyer, with every ton of scrap steel replacing about 1.4 tons of ore. Australia raised its 2019 iron ore price forecast to $66.90 a ton, from a previous estimate of $52.60. Prices will then decline to $57.30 next year, before rising again into the $60s in 2023. The estimates refer to spot 62 percent ore free-on- board Australia.