The probability of the strong momentum of iron ore market continuing after the Spring Festival is greater

Before the Spring Festival holiday, the black related metal market across the line higher, iron ore prices due to the dam break continued to ferment led to rise. February 1, iron ore main I1905 contract prices closed at 621.5 yuan/ton, the highest since April 2017, the weekly increase reached 16.39%.

After the Spring Festival, Vale Dam break accident on the short-term impact of iron ore prices or the close, but the focus of capital attention may be transferred to the mine hurricane weather caused by supply shortage, therefore, after the Spring Festival iron ore market strong momentum to continue the probability of greater.

Vale Dam break accident affected the continuous fermentation, the accident ignited the market to reduce production expectations. Before the Spring Festival, the Vale dam collapse accident pushed up the market trading heat. From a supply point of view, the impact of the accident on Vale's expansion plan will continue for 1 years ~3 years, and the impact on its iron ore production has risen to 40 million tonnes/year, significantly higher than the previous market estimate of 7.8 million tonnes/year ~2630 million tonnes/year.

Although the Vale announcement said it would make up for some of the reduced production through increased production in other mines, expectations of a reduction in iron ore production in 2019 were significantly warmer, with Vale's 2019 production target either falling from an increase to about 370 million tonnes. In terms of the impact on iron ore prices, the Vale dam crash had a significantly higher impact on its supply or on the global supply of iron ore in 2019 than expected. After the Spring Festival, the impact of Vale Dam break accident can continue to be further disclosed by the accident, but before the Spring Festival iron ore market sudden events occur frequently, the market trading atmosphere is obviously more numerous, after the Spring Festival market strong momentum to continue the probability of greater.

In the long run, the current market production reduction expectations are significantly heating up, if the 2019 iron ore supply reduction is confirmed, in the context of a small higher annual demand, iron ore supply and demand relations or transition to a phased tight balance, may cause the 2019 iron ore price center of gravity to move up.

The main producers of iron ore entered the hurricane season, the supply of seasonal decline or become the focus of attention after the Spring Festival. From the seasonal law point of view, the past 6 years of import iron ore delivery law is obvious, the first quarter of the main country of Australia and Brazil hurricane weather period, iron ore supply shortage, easy to support the price, and the second half of the mainstream mine traffic peak, supply increase to iron ore prices to form a suppression.

Looking back 2018 years, the annual single-month iron ore imports are in the 80 million ~10000 million tons range, the characteristics of the light peak season is obviously weakened, the impact on the price fluctuation of iron ore is correspondingly weakened. According to the latest news, in response to Hurricane Reilly, the Pilbara Port Authority of Australia cleaned the berths and docks on a phased basis on the evening of January 31 and completed the clearance work by 13 o'clock on February 1, with Rio Tinto's two iron ore transport capacity of 155 million tons per year in the port. Therefore, it should be noted that after the Spring Festival, the Vale accident on the short-term impact of iron ore prices or the close, but the focus of market funds to the hurricane weather caused by the supply shortage, the market trading atmosphere will continue to be more momentum.

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