Iron ore price, page-42553

Agreed it should hurt the Sp in theory. But I won't do an event based SP impact analysis to confirm the theory.

My point about guidance is all about the impact on the IO price.

Ever since the last railings disaster in 2018 they have failed to come close to guidance. But every year they tell us they will increase production on the last year.

A. it hasn't happened yet

B. Most importantly, most IO market analysts believe that Vale's production is one of the top 3 influences on the market of iron ore pricing. This I know for certain.


It is commonly argued that they have the greatest potential to increase production & continually do promise to do so. They have an increasing theoretical capacity of 400mt.

Vale are not stupid. It's has over promised and under delivered on guidance for the last three years.

Now they have changed its message a little, instead arguing it

A. Won't flood the market ( this assumes it could - which I don't believe it can, as its capacity would not be that much higher imo than its actual production.

B. It will focus on quality over quantity.

Vale are aware of the impact its production has on the market, and know that its production figures impact the price for IO to the extend that in a tight market, under performance results in an increase in the iron ore price and in turn profits.

If you produce a good or service and deliver less but maintain profits I can see how this makes a lot of sense for them, irrespective of the short term impact on Sp.

Vale is without doubt the biggest price maker of Iron ore along with RIO. But it's theirs theoretical maximum capacity that makes it the strongest in terms of market influence.

Short term SP pain for long term higher prices of IO can make a
lot of sense. But naturally only in a tight market. That's where we are today.

Just my two cents this morning.

Cheers