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Iron ore price jumps as Fortescue halts Pilbara operations

Fortescue Solomon project. Image from Fortescue.

Iron ore price jumped to a three-week high on Thursday after Fortescue Metals Group halted mining operations at its Solomon Hub site in Australia’s Pilbara region.

The world’s no.4 iron ore miner said an employee had died after a ground collapse.

The Solomon Hub, a remote mining site in Pilbara, comprises of Firetail, Kings Valley and Queens Valley mines, which together have a production capacity of 75 million tonnes of iron ore a year.

Iron ore for January delivery on China’s Dalian Commodity Exchange ended daytime trading 5.4% higher at 721.50 yuan ($111.58) a tonne, after scaling 758 yuan, its loftiest since September 8 earlier in the day.

According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $119.23 a tonne, up 4.3% from Wednesday’s closing.

This week’s gains in iron ore futures markets also mirrored the rebound in spot prices in top steel producer China, underpinned largely by restocking demand ahead of the nation’s Golden Week holiday from October 1.

Dalian iron ore, however, marked its first quarterly loss in two years and third consecutive monthly decline, having tumbled 42% since hitting a record peak in mid-May.

Caution prevailed in Chinese metals markets amid power curbs and shortages that have prompted production cuts.

“The power crunch is resulting in many steel mills having to cut production,” ANZ senior commodity strategist Daniel Hynes said, citing industry data that showed a 7.2% month-on-month output decline in the first two weeks of September.

Related: What is behind China’s power crunch?

The power shortage has dampened iron ore demand that has already been hammered as China seeks to limit steel output to reduce carbon emissions.

“Downstream consumption for stainless steel has been constrained, especially in Guangdong province,” said Fu Zhiwen, an analyst with Huatai Futures.

(With files from Bloomberg and Reuters)

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