Vale has raised its iron ore production forecast for 2024

Brazilian mining company Vale announced that this year it plans to produce 323-330 million tons of iron ore. It is reported by Bloomberg,

According to Vale, the annual forecast was revised due to outperformance in the first half of the year, modernization of processes and logistics, as well as positive profitability in all operating segments despite the pressure of ore prices.

The company, in particular, pointed to initiatives such as improving efficiency at the Serra Sul mining complex, using larger vessels to transport ore and new processing methods at the Vargem Grande 1 project, which will eventually add about 15 million tons to annual production.

The miner raised its production forecast despite iron ore trading at near two-year lows as a slowdown in China’s steel production affects the global market. In 2024, futures for these raw materials fell by a third, and at the beginning of this week, prices fell below $90/t for the first time since 2022.

The situation in China, which is the largest consumer of ore, did not prevent major producers, including Vale and Australian BHP Group and Rio Tinto, from supplying significant volumes to the market despite lower prices.

As Arthur Bontempo, Principal Analyst for Iron Ore and Steel at Wood Mackenzie, noted, since the offshore supply of this raw material is performing well this year, and port reserves are at a very high level, Vale’s increased forecast creates additional pressure on the market.

As GMK Center reported earlier, Vale in the II quarter increased iron ore production by 2.4% y/y – up to 80.6 million tons. Sales of this raw material in the second quarter increased by 7.3% year-on-year – up to 79.8 million tons. The production of pellets in this period decreased by 2.4% y/y – to 8.9 million tons.