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China iron ore rallies as Vale holds reopen at Brucutu mine
[BEIJING] China's iron ore futures rose 4 per cent on Tuesday, stoked by concerns over tight supply as Vale halted operation resumption at its Brucutu iron ore mining complex.
The Brazilian miner on Monday said that a court had ordered it to hold production at its Brucutu mine, its biggest iron ore mine in Minas Gerais with an annual capacity of 30 million tonnes, reversing a lower court decision that had allowed the mines activities to reopen.
The company now expects its 2019 sales of iron ore and pellets to be at the low to mid-end of its previous guidance of 307 million tonnes to 332 million tonnes.
"Due to production cuts at major miners in Australia and Brazil, we estimate the global iron ore supply to reduce 9.3 million tonnes despite increase elsewhere such as in China, India and Russia," said Zhang Yong, general manager at iron ore department at Mysteel consultancy.
The most-traded iron ore contract on the Dalian Commodity Exchange advanced 3.9 per cent to 658 yuan (S$132.47) a tonne, lingering around its three-week peak.
Meanwhile, China's central bank said it will cut reserve requirement ratios (RRRs), a targeted move to boost economy, which also helps to improve market sentiment amid an escalated trade tension between Beijing and Washington.
Benchmark rebar prices on the Shanghai Futures Exchange rose 1.2 per cent to 3,802 yuan a tonne after diving to a two-month low in the previous session, while hot-rolled coil futures climbed 1 per cent to 3,755 yuan.
Dalian coking coal and coke also rose on Tuesday, up 1.7 percent and 3.2 percent, respectively.
"Some coke plants in Shanxi and Hebei province have hiked physical coke prices by 100 yuan a tonne as they are keen to take advantages of firm demand at steel mills," said analysts from Huatai Futures.
On Monday, China's environment ministry censured the top coal and coke producing region Shanxi has relaxed environmental policies regarding its coking industry despite repeated orders from Beijing to curb production expansion from coke plants.