Vale, the Brazilian firm vying with Rio Tinto Group for the title of top iron ore supplier, delivered less of the steel raw material than expected in a welcome boost to a wavering recovery in prices.
Fourth quarter production came in at 82.5-million metric tons, compared with the 85.6-million-ton average estimate. Vale’s output also fell short of the third quarter and the year ago result.
The Rio de Janeiro-based company’s full-year output came in at the low end of its 315-million to 320-million-ton guidance range. Vale’s ongoing recovery from a 2019 tailings dam disaster makes it a major swing factor on the supply side.
After a bumper third quarter, Vale vowed to defend margins by cutting back on some lower-quality supply amid weaker prices as China limited steel output to contain pollution and power use. Bloomberg Intelligence sees global iron-ore supply contracting this year after growing in 2021 as producers emphasize value over volume.
Vale kept its 2022 projection of 320-million to 335-million tons despite rain interruptions last month. The production gap with Rio Tinto has all but disappeared as Vale recovers from the dam collapse and after Rio was hit with rain disruptions, the fallout from a cultural heritage fiasco and project delays.