The spot prices for iron ore rose from $ 75 per ton to $ 95 per ton in a few weeks after the disaster at the Brumadinho dam at the Feijao iron ore deposit in Brazil in Valais (NYSE: VALE), before settling at about $ 85 per ton, according to a recent study of the global iron ore market by the Macquarie Group.
Analysts from an Australian investment bank and financial services company report that spot prices have now been restored at $ 95 per ton, as lower shipments from Australia, mainly due to the cyclone Veronica, have contributed to interruptions in shipments from Brazil.
In addition, after the tragedy of Brumadinho, premiums for high-quality ore and discounts for low-grade ore decreased, notes Macquarie. Since the beginning of the year, prices have increased by about 35% for lower grade ore, while the premium for high grade ore has increased by 23% since the beginning of the year.
The report says that Vale’s share of total shipments from Brazil fell to 50% from a peak of about 90%. "While the initial decline was due to the sale of stocks, the recent sharp decline shows the degree of supply disruption."
The dynamics of supply and demand benefits the Australian iron ore producers.
“With spot prices, all covered Australian iron ore producers see a significant increase in projected earnings per share in a calendar year,” the report says. “BHP, Rio Tinto and Mineral Resources Inc. see earnings per share in 2019 increase by about 30% each.
