(Bloomberg) -- Iron ore rallied toward a two-year high after Vale SA declared force majeure on some contracts, raising worries of a global shortfall of the key steel-making ingredient. Australia & New Zealand Banking Group Ltd. is now forecasting a production deficit in 2019, compared with surplus of 15 million tons before Vale’s dam disaster in Brazil.
The rise in prices will boost free cash flow at iron ore producers Rio Tinto Group and BHP Group, UBS Group AG analysts said in a note dated Tuesday. Meanwhile, steelmakers already contending with prospects for slower global demand may face a profit squeeze. ArcelorMittal is expected to report bumper profits when it publishes full-year results Thursday, but investors will be looking at how confident steelmakers seem about passing through rising raw-material prices, said Colin Hamilton at BMO Capital Markets.
Minas Gerais Revokes Vale Brucutu Dam License (1:06pm in N.Y.)
A mining dam key to production at Vale’s Brucutu mine had its license to operate revoked on Feb. 5 by Minas Gerais state’s environmental regulator, known as Semad, according to the regional superintendent who signed the order.
AK Steel May Face Cost Hike on Vale Mine Halt (12:47pm in N.Y.)
The force majeure at Vale’s iron ore mine could raise the price AK Steel pays for the raw material unless the stoppage is lifted soon, says Phil Gibbs at Keybanc Capital Markets.
Court Denies Vale Appeal to Reopen Onca Puma (11:40am in N.Y.)
Brazil’s Federal Regional Court of the 1st Region (TRF1) denied on Feb. 1 an appeal in which Vale requested resumption of the mine’s operations and suspension of monthly deposits in favor of the Xikrin and Kayapo indigenous groups, according to a statement on regional prosecutors’ website.
Vale Seen ‘Likely’ to Resume at Shut Mine (10:45am in N.Y.)
A court ruling that forced Vale SA to declare force majeure at one of its largest mines, roiling iron ore markets globally, could be quickly overturned since the waste dam it targets is constructed differently than one that burst on Jan. 25, killing at least 150.
Miners Close to Bull Market as Iron Ore Gains (10:32am in N.Y.)
Miners attempted to re-enter bull market territory for a second time this week as iron ore prices edged higher after Brazil’s Vale SA declared force majeure on some contracts. The mood was also helped by copper extending recent gains, supported by optimism around U.S.-China trade talks.
Steelmakers Face Profit Squeeze as Vale Turmoil (7:44am in N.Y.)
Steel producers, already facing the prospect of slowing global growth putting a chill on demand, now have even more to worry about. The increased costs for iron ore will add to margin pressures for steelmakers after prices for their own products declined.
Steel Prices Should Move Up on Cost: JSW (6:11am in N.Y.)
Vale’s Brazil calamity has led to volatility in global markets and higher iron ore prices and that will keep steel prices elevated, JSW Steel’s Joint Managing Director Seshagiri Rao told reporters in Mumbai after the company released its earnings.
Samarco Said to Reboot Creditor Talks After Spill (6am in N.Y.)
Samarco Mineracao SA, the Brazilian mining venture that hasn’t operated since a deadly dam collapse in 2015, will seek to reboot talks with creditors after one of its parent companies suffered an even worse disaster at its own site, according to people involved in the discussions.
Iron Ore Rises Near Two-Year High on Disruption (5:27am in N.Y.)
Iron ore rallied toward $90 a ton after Vale SA declared force majeure on some contracts, raising worries of a global shortfall of the key steel-making ingredient.
Miners Set to Re-Enter Bull Market (3:59am in N.Y.)
The Stoxx Europe 600 basic resources index (SXPP) is set to re-enter a bull market after reversing most of its fourth-quarter slump, rising for a seventh day and advancing as much as 0.8% Wednesday.
Vale Declares Force Majeure (Tuesday, 7:48pm in N.Y.)
The Brazilian mining giant invoked the clause a day after a judge forced it to suspend some operations at its Brucutu mine -- a move that it said would result in an annual production loss of 30 million metric tons.
Iron Ore’s Gainto Boost BHP, Rio: UBS (Tuesday, 7pm in N.Y.)
The ~$10/metric ton rise in iron ore prices since the deadly tailings dam collapse at Vale SA’s operation in Brazil will lift Rio Tinto Group free cash flow by ~$1.9b, UBS Group AG analysts including Myles Allsop write in a note dated Tuesday.
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