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Vale (NYSE:VALE) said Wednesday it has lowered guidance for FY 2025 production of iron ore agglomerates, as the pellet market struggles with oversupply concerns and reduced demand for high-quality products.
The Brazilian miner cut its outlook to 31M-35M metric tons, down from a previous range of 38M-42M tons, saying in a securities filing that the decision reflected “current market conditions for pellets,” while all other estimates remained unchanged.
Analysts said the downside guidance was not a surprise, as pellet prices have been under pressure and Vale (NYSE:VALE) executives have emphasized that its portfolio is flexible and competitive.
“Vale’s decision aligns with the subdued market environment,” Wood Mackenzie analyst Artur Bontempo said, adding that compressed steel margins have pushed mills to favor cheaper, lower-grade ore over high-cost pellets.
Market conditions also have been pressured by rising output from the Samarco joint venture between Vale and BHP, which is set to add 8M tons of pellets and pellet feed to the market as it ramps up production.
Vale’s (VALE) new guidance would reduce seaborne pellet supply by 7M tons at the midpoint, representing 6% of the total market, according to RBC analysts.