Iron ore market at its two-year best level, says Vale

By  Paul Ploumis 07 Sep 2015  Last updated at 04:13:36 GMT

Murilo Ferreira, CEO, Vale stated that iron ore market has consolidated and is currently at the best point in two years.

SANTIAGO (Scrap Monster): In an interview to a local newspaper, Murilo Ferreira, CEO, Vale stated that the global iron ore market is currently at the best point in the past two years. According to him, exit by smaller iron ore suppliers and project delays at major mining nations including China, Mexico, Canada and Brazil has led to consolidation of major players. This situation has resulted in consolidation of the market by bigger players, Murilo noted.

The supply adjustments in iron ore market has helped to lift the iron ore outlook to much higher levels when compared to April year when prices had plummeted to lower levels. Though the outlook looks positive, the company rules out the possibilities of prices returning to previous high levels. The iron ore prices are unlikely to touch $100/dry mt CFR China mark any time soon.

The company plans to increase its ore production levels in 2016. As per previous estimates, Vale intends to produce 340 million tons in 2015 and further boost the output to 376 million tons in 2016. However, the company stated that it would give more emphasis to ore quality and margins going forward.

Murilo noted that Chinese markets are seen growing at a benign rate. The growth structure in the country has witnessed radical change over recent times. As a result, Chinese domestic iron ore production is expected to witness sharp fall to nearly 200 million tons per year in 2015. Consequently, the country’s imports of iron ore are likely to witness growth during the second half of the current year. The country is likely to see increased reliance on seaborne ore imports to meet requirements arising out of industrial sector growth.

The company added that production from the Serra Sul iron ore mining project is expected to peak to 90 million tonnes by 2018. The production from the mine is scheduled to start in 2016.