Analysts see higher Vale iron ore volume but lower revenue in Q3
Sunday, 11 Oct 2009
Business News Americas quoted some analysts as saying that Brazilian miner Vale will report a drop in Q3 revenues despite a 20% increase in sales volume QoQ.
The miner is expected to have sold 60 million tonnes of iron ore in Q3 versus 50 million tonnes in Q2.
Mr Pedro Galdi analyst with SLW brokerage told BNamericas that “Revenues will be reduced because most of the iron ore is being sold at spot market prices, which are extremely volatile.”
The analyst said about 60% of Vale's sales are being settled at spot prices and 40% at benchmark prices.
Mr Galdi said spot prices are currently hovering around USD 90 per tonne, slightly higher than benchmark prices, depending on the region.
Ms Ana Rayes analyst with Senso investment firm said Vale is expecting spot prices to be about 20% to 25% higher than benchmark prices in early 2010.
Ms Rayes did not specify how much iron ore Vale will have sold by volume in Q3 but she said it is definitely a higher number than Q2.
She said that "We spoke with Vale's investment relations department this week and they told us they set record sales. However, with the price reductions, margins have been reduced. But we are expecting that Vale could gain some profitability by selling at Chinese spot prices.”
