Moody's Investors Service has revised its price-sensitivity ranges for iron ore upward on the back of tight supply, said the rating agency.

Mine closures in Brazil and lower production in Australia have pushed the market into deficit, with the situation expected to improve only slowly through this year and 2020.

Moody's new price sensitivity ranges (62 per cent Fe China) are $60/MT-$90/MT with a midpoint of $75/MT, up from $45-$75/MT.

Carol Cowan, Moody's senior vice president, said: “Our new price ranges for iron ore reflect our expectation that only limited incremental new capacity will be added over the next few years.”

“While higher output from major global miners and Chinese domestic producers will see prices go down somewhat, supply will not fully recover in the near future,” she added.

BHP Group Ltd's, Rio Tinto Plc's and Fortescue Metals Group's production will all be higher next year than in 2019, Cowan says.

Meanwhile, production restarts at some Chinese operations will be limited by environmental factors and high costs. Brazilian mining giant Vale SA's ability to restore production at a mine after it collapsed in January will therefore remain the principal driver of balance in the market.

Robust steel production in China and lower iron ore production have pushed up demand for iron ore from the seaborne market, Moody's notes.

Consequently, the extent to which steel production restrictions are imposed over the winter will an important determinant for iron ore demand in the foreseeable future, it stated. – TradeArabia News Service