Brazilian miner Vale expects much lower iron ore output for the year

Leading Brazilian iron ore miner Vale SA lowered its production guidance for the current year. The move is expected to support the prices of the steel-making raw material.

Vale, the world’s largest producer of iron ore and nickel, expects iron ore production to total around 310-320 million metric tons in 2022. This is much lower than the earlier forecast of 320-335 million metric tons.

The company noted that the current market conditions had forced the company to seek greater flexibility in production. It noted that the sale of its operations in the Midwestern System has also contributed to the output guidance cut.

The company delivered 74.11 million metric tons of iron ore during the previous quarter, much lower than the average consensus estimate of 76.9 million metric tons.

The revised output guidance is bullish for the iron ore market, which has been reeling under pressure for several months now, driven by recession fears and doubts of further weakening of market demand due to increased pandemic restrictions by China.

Incidentally, iron ore prices have dropped by almost one-third since the peak hit in March this year. Goldman Sachs had recently predicted a weak iron price during H2 this year, citing the market surplus situation.

Also, Vale cut its annual production guidance for copper to 270,000-285,000 tons because of prolonged maintenance activities at its Sossego and Salabo mills.

Scrapmonster