If you were in any doubt about how remarkable the iron ore story has been this year, consider this: Dalian iron ore has doubled in value this year.

According to Reuters, iron ore futures on the Dailan Commodity Exchange continued their record-smashing run on Tuesday as data from Brazil continued to show falling exports from the South American nation.

Major supplier Brazil exported 29.40 million tonnes of iron ore in June, compared with 29.83 million tonnes in May and 35.29 million tonnes a year earlier, government data released on Monday showed.

Lower shipments from Brazil and Australia, where miners have lowered their 2019 output and export estimates due to operational issues and bad weather, have fuelled a rally in iron ore futures and spot prices.

The most-active September iron ore contract on the Dalian exchange jumped as much as 5.7 percent to 904.5 yuan ($131.82) a tonne, its highest since the benchmark’s launch in 2013, and extending gains into a fourth session. It closed up 5.2 percent at 900 yuan.

Supply could yet get tighter as well.

READ: Is the iron ore bull run set to continue?

Last month, mining giant Rio Tinto lowered its guidance on volumes of iron ore it expects to ship from the key Pilbara producing region in Australia for the third time since April, citing operational problems.

While Brazilian miner Vale SA brought one of its shuttered mines, Brucutu, back to full capacity late last month, Westpac analysts said the supply outlook for the year had not improved significantly, according to Reuters.

“Our models point to combined exports from Brazil and Australia down 36mt (million tonnes) for the year to date versus last year,” they said.

“Given Rio’s guidance and the lags in Brazil, it will be some time indeed before increased global supply offset the current structural deficit in this market,” the analysts said.


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