As oil crashes, iron ore is still rocking

Last year was supposed to be an aberration for iron ore, an unexpected period of sky-high prices after a fatal dam collapse in Brazil and a tropical cyclone in Australia. Instead, it continues to defy gravity. Sheltered from the worst of the pandemic upheaval, Australian diggers like BHP Group, which reported stable output for the March quarter Tuesday, can expect to benefit.

Rio de Janeiro-based Vale SA warned just weeks ago that weak demand from steel mills outside China would hurt iron ore as the coronavirus spreads, industrial appetite shrinks and producers bring down the shutters. The first part of the statement has proved accurate: Bloomberg Intelligence forecasts that pandemic-linked manufacturing shutdowns, especially among automakers, will drag demand down by 10 per cent to 15 per cent in the U.S.