Rio Tinto recently released its 2019 operation report, with its 2020 iron ore production target of 330-343 million tons. Rio said it will take some time for the mine to resume normal operation from the hurricane. At present, it is actively taking measures to minimize the interruption of iron ore supply.
Vale of Brazil also released its 2019 production report recently. According to the report, Vale's iron ore and pellet sales reached 312.5 million tons in 2019. In 2019, Vale's iron ore output reached 302 million tons, a year-on-year decrease of 21.5%; pellet mineral output was 41.8 million tons, a year-on-year decrease of 24.4%. In the fourth quarter of 2019, Vale's iron ore and pellet output was 88.9 million tons, 4.4% higher than the previous quarter. Vale said that its iron ore guiding output in 2020 is 340 million tons to 355 million tons, which is higher than the annual output guiding target of 307 million tons to 312 million tons last year.
Industry insiders said that the price rise of iron ore is more affected by the contraction of the supply side than the demand side. On the one hand, the main iron ore producing countries are affected by the weather to reduce the supply; on the other hand, although there is a trend of production reduction or production halt in the domestic iron and steel industry, there are few actions to reduce production under the support of "small profits", and the vast majority of steel mills still maintain their operation.
Looking forward to the future, CITIC futures believes that iron ore prices remain strong in the short term due to the slow maintenance and production reduction of steel mills, as well as the expected sharp decline in port inventory this week. After entering March, due to the accumulated inventory and profit compression, the steel plant continued to reduce production, the development and transportation volume of Australia and Brazil recovered, and the port inventory began to accumulate, so the iron ore price could be weakened.
