Vale's iron ore exports enter 3rd year of disruptions

Brazilian iron ore miner Vale SA has continued to face volatility in its exports. The company had faced a bar on exports from its Terminal Ilha Guaíba, located near Itaguaí in Rio de Janeiro, but received approval to reopen after winning a legal case against the ban, S&P Global Platts reported.

Disruptions to the iron ore market, in part driven by the ongoing trade spat between China and Australia — flagged in Panjiva's March 1 research — as well as accelerating steel price inflation, create considerable uncertainties for steel supply chain planning.

Panjiva's data shows the port was the third-largest handling Vale's exports, with 14.5% of shipments in the 12 months to Feb. 28. It was a source of much of the growth in shipments, with Vale's total exports up 24.3% year over year in the three months to Feb. 28 and shipments from the port increasing 168.9% over the same period. The latter did, however, reflect unusually low traffic a year earlier.

Vale's exports are also not as healthy as the year-over-year expansion would suggest, with exports in the three months to Feb. 28 down 29.4% compared to the same period of 2019. That indicates that some of the year-over-year expansion was due to the impact of the pandemic a year earlier. Comparisons with 2019 may improve, given the mining disaster that occurred in February 2019 led to a significant reduction in Vale's output that year.

Exports to China continued to dominate and represented 71.2% of shipments in the 12 months to Feb. 28. Exports to China fell 20.5% in the three months to Feb. 28 compared to the same period of 2019. Shipments to other centers have fallen more, though, with exports to Asia excluding China and to Europe down 37.6% and 59.1%, respectively.

Christopher Rogers is a senior researcher at Panjiva, which is a business line of S&P Global Market Intelligence, a division of S&P Global Inc. This content does not constitute investment advice, and the views and opinions expressed in this piece are those of the author and do not necessarily represent the views of S&P Global Market Intelligence. Links are current at the time of publication. S&P Global Market Intelligence is not responsible if those links are unavailable later.

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