SHANGHAI, Dec 21 (SMM) - On December 20, another torrential rain took place in Brazil. In Santa Catarina, a southern state of Brazil, the heavy downpour has claimed the lives of two people. Multiple buildings collapsed, and the access to some highways were denied. Two cities of the state declared a state of emergency. On the same day, Minas Geras, a state in the south-east of Brail, was also affected by heavy rain, which caused 91 cities to declare a state of emergency. Civil defense authorities said that the heavy rainfall already killed eight people and displaced 4,344 people in addition to the collapses of some highways. The most-traded DCE 2305 iron ore contract jumped on the news. But no announcement of production suspension has been released by mine companies including Vale.
Minas Geras is the main producing area of iron ore in Brazil, where the types of iron ore are not only diversified but also of high quality. It tops among all the states in Brazil in terms of iron ore reserves and output. Specifically, the types of ore produced there account for 62.5% of the total of 80 types in Brazil. The ore output there takes up 35% of the total output in Brazil (coal, natural gas and petroleum excluded). It is worth pointing out that its annual iron ore output reaches 150 million mt, accounting for 73% of the total in Brazil. The major mining companies include Vale, Mineracoes Brasileiras Reunidas (MBR), Ferteco, Mineracao, Samarco, etc.
Usually, the summer in Brazil lasts from December 22 to March 21, where the torrential rains often occur. However, the rainy season in Brazil arrived earlier this year than previous. At the beginning of this month, the storms persisted in the north-east and south of Brazil, which triggered floods in many places and disrupted the shipment of iron ore as well. According to SMM statistics, the shipments of iron ore from Brazil as of mid-December already fell for two straight weeks. Although the shipment returned to normal last week, the new rainstorm may once again reduce it. But the overall iron ore supply in 2022 will not be affected because only the production of some mines was hindered by the torrential rains for a short period of time. Besides, Vale already considered the possible impact of rainy reason on the production, so the production cuts will be limited. SMM will keep an eye on the impact of the heavy rain in Brazil on the iron ore supply.
