Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Vale’s iron ore shipments to China could rise in 2020, according to the China Iron and Steel Association. However the association did not give an estimated increase from the 190mn mt shipped by the company to the Asian country in 2019.


Steel mills in China, the world’s largest steelmaker, are expected to continue strong steel production for domestic demand through 2020 supported by government stimulus measures, according to recent media reports.


However, iron ore inventories at China’s ports dropped to 109.5mn mt on May 29, 2020, a level not encountered since November 2016. As a result, iron ore replenishments are expected to both buffer inventories and increase steel production through H2 2020. For perspective, iron ore stockpiles in China were 132.5mn mt on March 24, 2017 and 125mn mt on May 24, 2019. The stockpiles are expected to increase between 15-20mn mt, according to some estimates.


The South American miner is well placed to increase shipments to China in 2020. Vale’s production and operations have not been affected by the pandemic though the company has revised its 2020 iron ore fines production guidance to 310-330mn mt as of April 2020. The guidance decreased about 8pc from 340-355mn mt as a result of COVID-19 influence in Q1 2020. 


The company’s Q1, output of approximately 60mn mt was lower than the initial 63-68mn mt guidance that was established early in the year. Iron ore pellet production guidance for 2020 is at 35-40mn mt, down from its previous outlook of 44mn mt. 


Projections of 19pc iron ore import increases to China were revised down to 6pc as a result of COVID-19, according to the UN Conference on Trade and Development.

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