Fitch expects disruption from Vale's tailings dam failure at Feijao to reduce net iron ore supply from Brazil by about 30-50 million tonnes a year, and other supply cuts in the country at Usiminas, Companhia Siderurgica Nacional and Gerdau to weigh down output.

The agency upped its previous 2019 price forecast for CFR China iron ore from US$55/t to $75 per tonne, with the 2020 forecast now at $70/t compared with the previous $60/t.

Its long-term price estimate stays unchanged at $55/t.

Fitch said the level of supply disruption would obviously change if other iron ore producers increased output. However, it could be exacerbated in 2020 if Anglo American's Minas-Rio did not secure an operating licence to lift its tailings dam wall by 20m over the next 12 months.

Meanwhile, Fitch says lower projected market deficits for copper and aluminium in 2019-2021 are driving a weaker outlook for these industrial metals.

Fitch said the previously flagged copper deficits for 2010-2021 were not expected to materialise after all, since a combination of lower assumed global copper demand, particularly impacted by weaker demand from China, and a firmer project pipeline that would lead to larger new supplies and lower assumed disruptions at existing operations, was in the offing.

In 2019, copper spot is expected to fall $100 from the previous price forecast to $6,500/t, while the 2020 estimate is now $300 lower at $6,500/t. For 2021, the price assumption dropped $300 to $6,700, but the long-term price remained stable at $7,000.

A downward revision of aluminium price assumptions was driven by smaller projected market deficits and lower aluminium demand growth outside China, Fitch said. Aluminium followed a similar weakening outlook, with $150 coming off the 2019 price at $2,000, $200 off in 2020 and $100 lower in 2021 at $2,050, for both years respectively.