Brazil's Vale SA the world's No. 2 iron ore supplier, has lowered its full-year production forecast, which should support raw material prices for steelmaking, Bloomberg reported.
The Brazilian mining giant now expects to produce 310-320Mt of iron ore in 2022, down from the previous forecast of 320-335Mt. Vale attributed the downsizing to the sale of its Midwestern System operations and said it was seeking greater production flexibility "due to current market conditions".
The Brazilian mining company said on July 19 that it extracted 74.11 million tons last quarter, below analysts' average estimate of 76.9 million tons tracked by Bloomberg. The Rio de Janeiro-based company also revised its previously published production figures, reducing it from 63.9 million to 63.1 million tons in the last quarter.
Vale's competitors report tightening market conditions for commodity producers as fears of the global economic downturn hit demand. BHP warned of "an overall slowdown in global growth" and continued cost reductions in its quarterly production update. Rio Tinto's remarks pointed to a headwind in China, the biggest customer slowing due to the Covid-19 quarantines.
"Based on our analysis, iron ore and coal should be the top mining products for the remainder of this year," wrote Jefferies analysts, citing the cumulative effect of stimulus measures improving China's demand for iron ore.
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