Vale’s Iron Ore and Steel Exports Continue to Recover After Mining Disaster

Brazilian iron ore exporter Vale has seen a steady recovery in its shipments since a mining disaster earlier in 2019. Panjiva data shows there was a 15.7% sequential increase in June versus May, marking an 86.9% increase from April’s trough. However, that’s still down 25.6% year over year.

Exports to China were actually lower sequentially – potentially after prioritized restocking for Chinese buyers in May – but were down similar amount a similar amount to the total on a year over year basis.

Shipments by other iron ore exporters including CSN dropped in June by 22.0% sequentially, but are still up 111.5% year over year. As a result total exports were 4.3% higher sequentially, but down 12.8% year over year.

Our colleagues in S&P Global Market Intelligence still expect a global deficit in iron ore for the year, as outlined in Panjiva’s research of July 26.

VALE’S PAST ITS EXPORT TROUGH

Chart segments Brazilian exports of iron ore by shipper and destination. Source: Panjiva

The drop in iron ore exports may also be result of more being retained for the domestic market and steel production. Brazilian exports of steel products – focused on those targeted for previous U.S. section 232 tariffs – increased by 9.3% year over year globally in 2Q after a 24.1% slump in 1Q.

That’s largely been down to a surge in shipments to the U.S. which rose by 61.5% in 2Q within the confines of quotas defined by an agreement with the U.S. government. Meanwhile shipments to Europe were down 33.7% and those to the rest of the world fell 24.9%.

BRAZIL’S U.S.-BOUND STEEL RISE DESPITE BINDING QUOTAS

Chart segments Brazilian exports of steel targeted for U.S. section 232 tariffs destination on a monthly and three-month average basis. Source: Panjiva

Vale’s steel exports have surged 27.9% higher year over year in 2Q after a 47.9% drop in 1Q, suggesting it is indeed retaining iron ore for its own development. Among other major steel producers, there was a 6.3% drop in exports by ArcelorMittal in 2Q, reversing a 31.8% jump in 1Q.

Ternium saw the fastest recovery with a 55.8% surge in 2Q from a 37.2% slump in 1Q. Other exports appear to be in a continued decline with an 11.1% contraction in 2Q after a 42.9% collapse in 1Q, likely due to the shortage of iron ore.

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TERNIUM’S EXPORTS TURN UPWARDS, ARCELORMITTAL SLIPS

Chart segments Brazilian exports of selected steel products by shipper on a monthly and three-month average basis. Source: Panjiva

Date of publication: August 2, 2019

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