Specialist
Former C-Level Executive at Samarco Mineracao
Agenda
- Supply and demand balances across 62% and 65% purity iron ore
- Capacity build-outs and potential new openings in broader market following Vale closures
- Expectations for Vale capacity reopenings
- Impact of European steel downturn on iron ore demand
- Effects of Chinese construction downturn on iron ore prices
Questions
1.
Can we start with your updated perspective on global supply and demand for iron ore, accounting for the Vale Brumadinho dam collapse and Chinese demand more broadly?
2.
Examining that global iron ore supply by purity, how would you characterise the lack of supply across 58, 62 and 65 qualities?
3.
How is customers’ demand shifting between the three different quality grades? What trends would you highlight in demand for 62 vs 65?
4.
How are European players responding to that 62 supply cut from Vale? Do they start shifting to 65, and can they do that in unison with this 62 supply cut?
5.
Does the ability to switch over to 65 mitigate the price hike in 62, relative to not having that capability?
6.
At what price delta would steel manufacturers typically start shifting from 62 to 65 and vice versa?
7.
Can you outline why Vale went from the closure of a single mine to the closure of additional mines, and the tonnage total impact of 62 and 65?
8.
What capacity additions have there been from players besides Vale since the incident earlier this year, and what is your outlook for additional capacity opening over the following year?
9.
How would you evaluate the general utilisation at mines in the period since the Vale incident? How much can that utilisation be flexed, given the nameplate capacity?
10.
Examining smaller players in Brazil, what EBITDA would you expect Vallourec to have generated in the quarter in a 4.5-million-tonne capacity mine, with the EUR 120 iron ore price?
11.
Which players do you think are bringing volume to market on the premise of supply shortages? Who is being more short-term, rather than considering potential longer-term price drops and demand shortages?
12.
When are you expecting some normalisation in iron ore prices? There is quite a lot of volatility, and BHP has recently said it is expecting a couple more years until the pricing stabilises.
13.
How do you think iron ore inventories are changing globally, given these supply and demand dynamics?
14.
There has been some shift on the demand side towards higher-quality iron ore grades. How are players addressing this flight-to-quality, focusing on Vale and its split of the purities with the option to go 62, 65?
15.
Do you think a customer is more likely to stick with the blend of 62 and 65, rather than buy 65 and then blend it with 58 themselves? How do customers evaluate blending vs buying more 65 if Vale was to increase that production, and then buying a lower purity as well? Is it a significantly different purchase?
16.
How much blending capacity does Vale have to mix 65 with lower quality?
17.
Is that blending process a particularly intensive procedure, or is it just pouring two buckets of 62 and 65 into the same container?
18.
Blending seems like a relatively simple procedure, if it is just building piles. Why would a customer be more willing to buy a blend than to buy 65 and then buy 68?
19.
What proportion of customers do not have the stockyard capacity for blending their own, or do not have access to multiple different grades? Gauging the TAM for the blended, it seems the main customer characteristic is lacking this stockyard capacity.
