Vale lowers its pellet production target for 2025

The company cites current market conditions, in particular, an oversupply of sinter

Brazilian mining giant Vale has lowered its iron ore pellet production target for the current year to 31-35 million tons (previously 38-42 million tons), Reuters reports.

The company cites the market’s oversupply and declining demand for high-quality products. In its securities report, Vale notes that this decision reflects current market conditions.

Analysts explain that steel companies are prioritizing cheaper alternatives to ore due to shrinking margins. As a result, mining companies are refocusing on selling fine-grained raw materials.

The revision of the target for the current year also takes into account preventive maintenance at the San Luis plant during the third quarter, which will temporarily suspend operations.

This reduction in production, equivalent to approximately 7 million tons or 6% of seaborne supplies, is expected to tighten the market and increase premiums for pellets. In addition, this decision may be beneficial to Vale’s competitor, Rio Tinto.

In May of this year, Vale announced plans to launch a new product on the market: ore with a lower iron content. This production will allow the company to reduce enrichment costs and, accordingly, the selling price. Deliveries are expected to start in the coming months. The main goal is to strengthen the company’s position in Asian markets, particularly in China, which remains a key consumer of Vale’s products.