(Bloomberg) -- Vale SA said it will produce more iron ore this year than previously expected, even with prices trading near two-year lows as China’s steel slowdown weighs on the global market.
The world’s No. 2 iron ore supplier said in a Wednesday presentation to investors that it expects to produce 323 million to 330 million metric tons of the steelmaking ingredient this year, compared with a prior forecast of 310 million to 320 million tons.
The slowdown in top iron-ore consumer China hasn’t stopped large producers including Vale and Australian peers BHP Group Ltd. and Rio Tinto Group from delivering robust volumes to the market despite weakening prices. Iron ore futures have fallen by a third this year, with prices slipping below $90 a ton for the first time since 2022 earlier this week.
“With 2024’s seaborne iron-ore shipments presenting a strong performance and port stocks at very high level, Vale’s guidance increase brings additional pressure on the already moody market,” said Artur Bontempo, principal iron ore and steel analyst at Wood Mackenzie.
Guidance Revision
Vale said it revised its full-year guidance due to outperforming output in the first half, impacts from upgraded processes and logistics as well as positive margins in all operations despite iron ore pricing pressures.
The Rio de Janeiro-based company specifically cited initiatives such as improved efficiency measures at its northern Brazil mining complex, Serra Sul, using larger ships to transport ore, and new processing methods at its Vargem Grande 1 project in the country’s southeast that will ultimately add about 15 million tons to annual production.
The revision comes two weeks after Vale announced Gustavo Pimenta as its next chief executive officer, who will take over Jan. 1. Pimenta, who is currently the chief financial officer, has been tasked with maximizing iron ore output to boost efficiencies at the Brazilian mining giant despite China’s fading appetite for the steelmaking ingredient.
Vale also lowered its nickel production guidance to 153,000 tons to 168,000 tons from a previous range of 160,000 tons to 175,000 tons.
(Adds analyst comment, iron ore prices and guidance details from third paragraph.)
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