November 4, 2019 / 3:12 AM / 16 days ago

Iron ore futures slip as Vale gets nod to resume major mine ops

* Vale to restore 8 mln T output from Alegria mine

* Brazil October iron ore exports higher vs September

* Iron ore prices may fall to $70/t next year - CLSA

By Enrico Dela Cruz

MANILA, Nov 4 (Reuters) - Iron ore futures in China, the world’s top consumer of the steelmaking raw material, and in Singapore were lower in early trade on Monday after miner Vale SA got approval to resume activities at a major mine in Brazil.

Dalian Commodity Exchange’s most-traded iron ore, for delivery in January 2020, slipped 1% to 616.50 yuan ($87.69) a tonne.

On the Singapore Exchange, the front-month December contract fell 1.5% to $80.52 a tonne.

Vale, the world’s largest iron ore miner and China’s main source of high-grade material, said on Friday it had been authorized by Brazilian regulator ANM to resume Alegria mine operations, which were interrupted last March after a “stress test” failed to guarantee its stability.

The company said the resumption of mining activities at Alegria will allow it to restore 8 million tonnes of 50 million in capacity lost after the collapse of its Brumadinho dam in January caused a series of shutdowns.

The mine’s resumption will add up to 1 million tonnes to production volumes in 2019, but should not impact sales this year, it said.

Tight supply concerns in the aftermath of the Vale dam burst and dam shutdowns for safety checks, along with operational issues that also hit miners in Australia, had pushed iron ore prices up until July to five-year peaks.

Prices have since pulled back as supply has started normalising, with imported iron ore inventory at Chinese ports scaling a six-month high late last month. SH-TOT-IRONINV

Benchmark spot 62% iron ore, which slumped to its lowest in more than seven months last week at $85 a tonne, based on SteelHome consultancy data SH-CCN-IRNOR62, may average $90 this quarter and drop to $70 next year, said Andrew Driscoll, head of resources research at CLSA.

“A recovery in supply from Brazil amidst limited demand growth should see the market better supplied and prices intersecting a lower point on the cost curve, relative to this year,” he said.

FUNDEMENTALS

* Brazil’s iron ore exports in October reached 31.2 million tonnes, compared with 27.14 million tonnes the month before.

* The most-traded construction steel rebar on the Shanghai Futures Exchange was up 0.4%, as of 0239 GMT, while hot-rolled steel coil, used in cars and home appliances, rose 0.3%.

* Shanghai stainless steel inched up 0.5%.

* Dalian coking coal fell 1.6% and Dalian coke edged down 0.4%.

($1 = 7.0306 yuan)

Reporting by Enrico dela Cruz; Editing by Aditya Soni

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