World’s main iron ore producer optimistic about China demand
Mercopress - February 22, 2009
Brazilian mining giant Vale do Rio Doce, the world's biggest iron ore producer, expects to ship a record-high 30 million tonnes of iron ore to China in the first quarter of 2009, it said on Friday.
China is Brazil's single biggest customer for iron ore and the mining industry is sensitive to any change demand from the Asian giant, which is still in growth as other large economies slide towards recession.
"Demand in China is coming back beyond previous levels ... China is helping cover a lot of weakness in other markets," said Jose Carlos Martins, executive director of ferrous minerals.
Chief Executive Roger Agnelli said steel mills in Europe had, like China, been burning through their iron ore and steel stocks and could be expected to start buying again in the second quarter.
On Thursday, the company announced fourth quarter net profits of 10.44 billion Reales (4.44 billion US dollars), more than double the 4.41 billion Reales it made in the same three-month period of 2007 and the 4.82 billion Reales profit in quarter three.
The company said that cost controls, production cuts and a weaker local currency helped it offset weaker demand for metals. (The weaker Brazilian currency inflated its earnings at home from dollar-denominated exports). The Brazilian currency Real has shed about 33% of its value against the US dollar since hitting a nine-year high last August.
Overall revenue totalled 17.94 billion Reales in the fourth quarter, up from 15.21 billion Reales in the year-earlier period but down from 21.39 billion Reales in the third quarter of 2008.
However according to US GAAP accounting principles, Vale's fourth-quarter net profit fell 47% to 1.37 billion US dollars from 2.57 billion in the year-ago period and 4.82 billion in the third quarter.
The global market turmoil had seen demand for iron ore plummet in the last quarter of 2008. Vale slowed production at some of its mines in Brazil and abroad and in December announced it was cutting 1,300 jobs and put 5,500 on mandatory paid vacation.
