China and Europe buying lift Brazil iron ore exports

Brazil's iron ore exports rose by 34pc on the year in March thanks to increased buying from China and Europe.

Last year's first-quarter exports were limited by heavy rains and flooding, and by major producer Vale's slow recovery from a dam accident in 2019, while full-year exports were at a seven-year low largely as a result of Covid-19.

Vale expects to raise its iron ore production capacity by 8.7pc to 350mn t/yr this year, but this would still be a reduction of approximately 10pc compared with 2018.

Brazil's shipments to China rose by 27pc on the year to 17.37mn t in March as a result of China's rapid increase in steel output in the first quarter. On 19 March, the major Chinese steel-producing city of Tangshan ordered 23 mills to reduce production by 30-50pc from 20 March, which weighed on demand for iron ore fines but supported pellet demand.

Brazil exported 3.03mn t to the EU in March, 55pc higher than a year earlier when steelmakers sharply reduced production because of the spread of Covid-19. Brazil's first-quarter exports to Europe found support from lengthening lead times and rising steel prices. The Argus daily northwest Europe hot-rolled coil assessment rose steadily through the first quarter and averaged €788.35/t in March, €311.46/t higher than a year earlier.

Shipments to Malaysia more than tripled on an annual basis to 2.59mn t in March. Vale closed its Teluk Rubiah iron ore blending site from 23 March 2020 to comply with a national lockdown in Malaysia.

Shipments to Japan fell by 51pc to 619,726t. with Japan's steel output at an approximately 50-year low in the April 2020-March 2021 fiscal year, under pressure from weak demand in the vehicle sector and a second state of national emergency over Covid-19.

By Brendan Kjellberg-Motton

Brazil iron ore exports mn t