Brazilian mining company Vale expects steel production cuts in Europe will impact iron ore demand, though iron ore supply cuts due to lockdowns could soften the blow, Mysteel Global learnt from a presentation Vale released on its official website on March 31 local time.
According to Vale’s calculation, as of March 26 the volume of steel capacity European steel companies in EU28 had announced they were idling accounted for 17% of their total capacity.
Meanwhile, looking at the global iron ore market across all iron ore producers, Vale said it calculated that roughly 18 MnT of ore output could be interrupted in the trans-oceanic market as a result of lockdown-related production cuts in Canada, Malaysia, India, Peru and Africa caused by the COVID-19 spread.
Nonetheless, Vale remarked that so far, it has been weathering the pandemic outbreak, with limited impact in its operations. It confirmed that there were no interruptions at Brazilian operations and at Chinese ports, though operations at its Malaysia distribution center have been suspended.
In the presentation, Vale made no comment on its annual guidance for 2020. Prior to this, the miner had anticipated that production of iron ore fines would increase to around 340-355 MnT and that of pellets to 44 MnT for 2020.
However, the miner did admit that it was at risk of postponing the resumption of lost production capacity due to delayed inspections, assessments or authorizations affected by coronavirus.
Vale said in February that it expected to gradually resume iron ore capacity of approximately 40 MnT/year halted after the dam accident in January 2019 at various mines this year, as Mysteel reported.
“Up to this moment, Vale is performing relatively well, with limited impact on production and sales, but our ecosystem has been highly impacted by the restrictions imposed by the COVID-19 pandemic, which could ultimately affect our operations,” the company said.
For 2019, Vale’s sales of iron ore fines (including third party purchases and run-of-mine) and pellets reached 312.5 MnT.
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
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