quarta-feira, 07 de junho, 2017

Fall in the price of iron ore is additional challenge to the new President of the Valley

The mining company Vale remains quite profitable despite the significant fall in iron ore prices this year, but an expected weaker demand brings an additional challenge to the new President of the industry leader, Fabio Schvartsman, according to experts. Iron ore prices on the spot market in China, the largest importer worldwide, have already fallen more than 40% since the maximum of the year above 90 dollars per tonne, also pressed by increased global supply. On Tuesday, they closed at about $56. As a result of lower prices, with brazilian exports of iron ore in the country in may rose just 1,8% compared the previous month, to 1.651 billion dollars, while shipments grew by 46% during the same period, to 35,111,000 tons, according to data from the federal Government. The country''s export data is an important indication of the recipe of Vale, largest producer of commodity and dominant in exports of the national product. But to face this scenario the company made too much effort to reduce costs in recent years and has yet to your favor the progressive increase of production of the mine S11D--the world''s largest investment in the history of the company, in Canaan dos Carajás, in Pará, which produces a high iron ore and high technology. "The Valley did a homework very well, gaining efficiency and, with the S11D, has an ore to sell in the second and third quarters of better quality," said the strategist of the Guide Investments Luis Gustavo Pereira. The mine entered into commercial operation S11D in January and is in the process of increase in production. With the active, the company can better manage the production according to your demand and generate more value to their operations. The start of operation also allows the closing of a cycle of investments of the Valley, which has no new active Giants to invest in the short term. Company executives come stating that the mining company is focused in achieve the goal of debt reduction, while completes the cycle of injections and preparing the groundwork for a generation of free cash flow even stronger from this year. Impact on actions however, analysts who follow the Valley believe the volatility of prices, in addition to reducing the company''s profitability, influence the behavior of its shares on the stock exchange. "While the Valley remains a very well-managed company, we believe that the fall of the iron ore should continue to be the main driver," analysts of BTG Pactual Leonardo Correa and Caio Ribeiro, in a report sent to clients on the impacts the price of ore. For BTG, the high prices to 80/90 dollars per ton in the first half of this year had no grounds, before the growth of the offer of large mining companies, the slowdown in demand and other issues. "Most of these risks materialized, and prices quickly desinflaram to 60 dollars per tonne, which is more reasonable," analysts of BTG. Challenges the new President the new pricing scenario represents an additional challenge for Schvartsman, which has as one of the main missions lead Vale in the coming years towards the control and the new Market of powdered B3 (ex-Bovespa). The Executive, who took over in may, has not yet granted interviews to the press. The former Director of Valley Roberto Castello Branco said in an interview with Reuters that the new President has already found a "reasonably tidy House" and announced "very good" intentions, in conversations with market analysts, such as the creation of groups to assess the strategy and performance of the company in several business units. "The Valley has assets that do not generate value that has to be closed ... the crucial question is to get rid of assets that don''t perform like New Caledonia (Oceania, where produces nickel)," said Castello Branco, currently Director of institutional Getulio Vargas. To Castello Branco, however, the iron ore remains "the heart of the Valley, big box and generator of value" of the company. Thus, according to him, the company''s diversification to reduce risk exposure of iron ore, which was also billed as a new President''s intent, must be done carefully. "The iron ore is and will continue to be a super active of the Valley," he said, explaining that a recovery of prices will depend on market news. One of them, according to Castello Branco, could be closing less profitable mines in the world due to falling prices, since a surprise on the demand side, in the short term, it doesn''t seem likely in your evaluation. "The market is moved by surprises, positive or negative," he added. Sought for comment on the subject, the Valley has not responded about the recent behavior of prices, but highlighted by email continues prioritizing the maximization of profit margins rather than volume and working to improve the efficiency of the global value chain through productivity and cost reduction. "We seek to improve further the realization of prices through the development of new distribution channels and getting awards with high quality ore. These initiatives will help the company to become more competitive and efficient, the company said.
Infomet - 07/06/2017 Noticia traduzida automaticamente
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