Vale, the world's No. 2 iron ore producer, churned out more of the steelmaking ingredient than expected last quarter to add further pressure to prices that have been battered by recession fears.
The Brazilian mining giant produced 89.7 million metric tons, topping the 87.2 million-ton average analyst estimate. The result was also well ahead of the previous three months and slightly more than a year ago. Vale also saw sharp gains in nickel and copper output.
In a report last week, the Rio de Janeiro-based company attributed the iron ore output growth to dry weather in northern Brazil and higher third-party purchases and production in the south. Still, sales came in well below output, which Vale put down to transiting inventories along the supply chain.
Concerns over the cooling impact of higher interest rates, as well as China's zero-covid policy and a recent push for pollution curbs, have iron ore futures trading near their lowest this year. So far, China's peak building season has failed to ignite a recovery.
Vale is a major swing factor on the supply side amid its slow recovery from a 2019 dam collapse. The firm cut annual production guidance in July, saying it was seeking greater flexibility due to market conditions. It needs to produce at least 83 million tons this quarter to reach the lower end of the guidance range of 310-320 million tons.
