January 28, 2019 / 7:41 AM / 8 months ago

UPDATE 1-China's iron ore hits 16-month high after Vale dam disaster

    * Mud from tailings dam hits Vale mine facilities
    * Disaster kills 58, hundreds still missing
    * Brazil orders Vale to halt Corrego do Feijao mine ops
    * Iron ore up as much as 6 pct before closing off highs
    * Analysts, traders see limited price impact in short term

 (Updates with more comments, closing prices)
    By Enrico Dela Cruz
    MANILA, Jan 28 (Reuters) - Chinese iron ore futures soared
to a 16-month peak on Monday after Brazil's mining agency
ordered Vale SA, the world's biggest iron ore producer, to halt
operations at its Corrego do Feijao mine following a deadly
tailings dam collapse.
    The dam broke on Friday, releasing a torrent of mud that
slammed into Vale's            mining facilities and cut through
a nearby community, killing 58 people, with hundreds still
missing.             
    The most traded iron ore on the Dalian Commodity Exchange
          rose as much as 6 percent to 567.5 yuan ($84.23) a
tonne, the highest since September 2017, before paring gains to
close 2.8 percent higher at 550.5 yuan.
    "The accident involves Brazilian high-grade ore. However, I
think physical prices may not change significantly as the
futures are doing because the market has already been very, very
quiet (ahead of the Lunar New Year holiday in early February),"
said Richard Lu, an analyst at CRU consultancy in Beijing. 
    China, the world's biggest consumer of the steelmaking
ingredient, needs higher-quality, less-polluting grades of iron
ore in its long-running anti-smog campaign.
    The Corrego do Feijao mine shutdown will result in a 1.5
percent production loss at Vale, which will have a "negligible"
impact on supply, said Helen Lau, an analyst with Argonaut
Securities.    
    "Overall, we do not expect to see a big rebound in iron ore
prices in view of this deadly accident as China's iron ore
demand over the short term will be mild due to weak
seasonality," Lau said in a note.
    How long would the mine shutdown last is the big question,
CRU's Lu said.
    "The short-term impact is limited considering the mine
itself only has 7.8 million tonnes capacity and China's current
iron ore inventory is still high," a Qingdao-based iron ore
trader said.
    Coking coal          was nearly flat at 1,222 yuan a tonne,
up 0.04 percent, while coke          edged down 0.7 percent at
2,041 yuan.
    Steel futures seesawed before ending lower, despite a
second-level or "orange" pollution alert issued by China's
biggest steelmaking city, Tangshan, for a wave of smog expected
to blanket the region. It will be in effect from Jan. 28 until
Jan. 30.             
    The alert means steel mills will have to curtail sintering
operation by 30 percent to 60 percent, or even shut, based on
their emission levels.
    The most-active rebar contract on the Shanghai Futures
Exchange          was 0.8 percent lower at 3,681 yuan a tonne.
Hot rolled coil          dropped 1 percent to 3,588 yuan.
    
    ($1 = 6.7374 yuan)
    

 (Additional reporting by Muyu Xu in BEIJING; Editing by
Subhranshu Sahu and Sherry Jacob-Phillips)
  
Nuestros Estándares:Los principios Thomson Reuters
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