March 18, 2019 / 3:06 AM / 3 months ago

Dalian iron ore rises 3 pct on Vale supply disruption concern

* Vale to cut 12 mln T iron ore output in Minas Gerais

* All Vale closures equal to 5.7 pct of seaborne market -Jefferies

* Utilisation rate at mills falls to 62.29 pct -Mysteel

BEIJING, March 18 (Reuters) - Chinese iron ore futures rose nearly 3 percent on Monday, supported by concerns over tight supply of the steel-making raw material after Vale SA announced further output cuts.

The Brazilian miner said on Saturday that it will trim production at an iron ore mine in the state of Minas Gerais with annual capacity of 12 million tonnes and will also suspend operations at its Doutor dam.

This comes on top of the temporary closure of its Brucutu mine and other mines in southern states, which were expected to affect 70 million tonnes a year of production capacity.

“(The new closures) were not expected ... It takes total expected gross capacity closures from Vale to a run rate of 83 million tonnes per year, which equates to a significant 5.7 percent of the seaborne iron ore market,” said analysts from Jefferies in a note.

The most-active iron ore futures on the Dalian Commodity Exchange jumped as much as 2.9 percent to a two-week high at 640.5 yuan ($95.40) a tonne when the market opened on Monday. The contract was up 1.9 percent at 634 yuan a tonne as of 0246 GMT.

The impact of supply disruptions has been partly offset by falling demand at Chinese steel mills after local governments stepped up environmental restrictions ahead of the end of the winter anti-smog campaign in late-March.

Utilisation rates at steel mills across the country continued to fall last week, easing to 62.29 percent as of March 15, their lowest level in a year, data compiled by Mysteel consultancy showed.

Benchmark construction steel rebar prices on the Shanghai Futures Exchange edged down 0.1 percent to 3,761 yuan a tonne.

Hot-rolled coil futures for May delivery climbed 0.3 percent to 3,688 yuan.

$1 = 6.7136 Chinese yuan renminbi Reporting by Muyu Xu and Tom Daly; editing by Richard Pullin

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