Another Vale mine forced to close, page-147

Vale is reporting its second quarter results this week.

Analysts predict sales of 70.6mt of IO and pellets.

I generally don't pay much homage to what analysts say but I think sales will be quite a bit less than this.

Vale in their last quarterly said they are changing the way sales are being recognised. It will now occur based on when the cargo is retrieved. (pg 3 in last quarterly)

Reviewing weekly data of Vale shipments from w/e 17 Feb to w/e 12 May, there were about 53mt shipped that would have arrived at port taking into account transit times to China. This takes into account pretty dire shipping numbers throughout the whole of April.

Some of the ore shipped would have gone to other countries and there would have been pellets sold to Brazilian steel mills as well that would not be shown in shipping numbers (In Tuberao). In the last quarter there were 12m produced and sold. Given this is the first full quarter where shutdowns are accounted for, if we say 10mt then it takes total sales to around 63mt.

Also movements of inventory at port will affect sales. I do recall seeing on here that port inventory of Vale IO not being drawdown at the same rate as from other suppliers.

In any case, I'd expect sales to be well down again. I'd be interested to see if there is a revision downwards to their full year sale's forecast. If I were a betting man, I would say more likely than a sales upgrade.