The news was bullish for iron ore, Jefferies analyst Christopher LaFemina said in a note on Sunday, adding 188 Itabira workers had tested positive for the virus despite Vale taking measures to prevent the spread.
The company maintained its revised 2020 iron ore fines production guidance of 310-330 million tonnes, as it had already provisioned up to 15Mt of losses associated with COVID-19.
However it said there might be a temporary shortage of pellets for the domestic market, given Itabira provided pellet feed for the pelletizers of the Tubarão complex.
"This closure is likely to be relatively short (weeks, not months), so the impact on full-year iron ore supply should be relatively small, but we would expect iron ore prices to strengthen on this news anyway as the market is already tight," LaFemina said.
Vale confirmed on Saturday it had adopted the necessary measures to suspend Itabira.
Shanghai Metals Market repeats witness on aluminium and alumina prices going opposite directions
Aluminium prices rise across the board on SMM, defying previous week’s declining trend
