The twin factors of the Vale mining disaster in Brazil and cyclone damage to existing operations in Australia means an opportunity for emerging iron ore producers.

Respected market analysis group S&P Global says Brazilian production will fall by 54 million tonnes this year — more than double its previous estimate of 23Mt.

Meanwhile, it’s forecasted Australian production of 892Mt — which is a drop on previous forecasts of 16Mt.

Given Australia and Brazil are major exporters of iron ore, to China notably, supply constriction from those two sources should support prices — which have been broadly up this year.

S&P says overall the seaborne deficit is expected to hit 40 million tonnes.

It also comes at a time when a school of thought is emerging that China could be looking to export steel production as internal construction tapers off.

READ: What this steel mega-merger in China says about iron ore

The constriction in supply is great news for iron ore exporters who are able to source customers in the market in the short-to-medium term.

With Brazilian production in particular thought to take some time to recover to previous levels, there is the possibility that price support will remain in place for some time.

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