By How Much Has Vale Lowered Its Planned Iron Ore Production?

+38.59%
Upside
11.84
Market
16.41
Trefis
VALE: VALE logo
VALE
VALE

Vale, the world’s largest iron ore producer, is one of the companies driving the rapid increase in global iron ore production, which in conjunction with subdued demand conditions, has resulted in an oversupply situation. Vale’s S11D iron ore project, which is expected to commence production later this year, will sharply boost the company’s iron ore production in the near term. Despite the prevailing subdued iron ore pricing environment, major iron ore mining companies such as Vale are executing plans to ramp up production, betting on high-cost iron ore miners exiting the market to make the global balance of demand and supply more favorable. Check out our forecasts for Vale’s realized iron ore prices.

Though Vale is going ahead with plans to ramp up production in the near term, it recently lowered its iron ore production guidance by 1.4% and 2.6%, for 2016 and 2017, respectively. The reduction in planned iron ore production indicates the management’s recognition of market realities and an attempt to more closely align production with demand.

Vale Change In Production Guidance

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Vale