{"id":286773,"date":"2021-01-06T16:17:41","date_gmt":"2021-01-06T19:17:41","guid":{"rendered":"https:\/\/anba.com.br\/?p=286773"},"modified":"2021-01-06T16:17:41","modified_gmt":"2021-01-06T19:17:41","slug":"rising-iron-ore-prices-could-benefit-brazils-trade-balance","status":"publish","type":"post","link":"https:\/\/anba.com.br\/en\/rising-iron-ore-prices-could-benefit-brazils-trade-balance\/","title":{"rendered":"Rising iron ore prices could benefit Brazil\u2019s trade balance"},"content":{"rendered":"

S\u00e3o Paulo \u2013 Higher iron ore prices are expected to benefit the Brazilian trade balance in 2021, drive up profitability of the commodity\u2019s exporters and make ore-derived products more expensive. The reasons for rising ore prices are a decreased supply due to the pandemic and an ever-increasing demand. The commodity is currently worth as much as USD170 per tonne. Last February, it was worth USD78 per tonne.<\/p>\n

According to data from Brazil\u2019s Ministry of Economy, last year the country exported USD22.7 billion worth in iron ore, USD16.3 billion of which were to China, our main buyer. The previous year’s ore exports reached USD22.6 billion, being USD13.5 billion to China. Exports to Oman, where Vale has a pelletizing plant, reached USD560 million last year, down from the USD660 million exported in 2019 to the Arab country.<\/p>\n

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Vale\u2019s iron ore shipment<\/figcaption><\/figure>\n

Terra Investimentos investment analyst R\u00e9gis Chinchila said China has a high demand for base metals, such as iron ore, but Brazil and Australia, which together supply approximately 70% of the Chinese purchases, are supplying less ore. \u201cThe high demand and low stock levels, in addition to Vale announcing that it has disregarded its iron ore output goal for 2020, made the commodity\u2019s price soar in the beginning of 2021,\u201d said Chinchila.<\/p>\n

Vale has face unforeseen barriers in 2020, from adverse weather conditions to the pandemic, which led to a reduced ouput early in the year. As for Australia\u2019s supply, it\u2019s lower because the country and China have face diplomatic and trade disputes that are affecting their economic relations.<\/p>\n

Outcome<\/strong><\/p>\n

There are some direct consequences from the commodity\u2019s increasing prices. The first one is that Brazil could export a lower volume of ore but at a higher value and profitability in 2021. \u201cChina is studying ways for not being so reliant on other markets such as Brazil and Australia to get iron ore, having set a goal to obtain at least 45% of its iron ore demand from local plants by 2025. Until then, however, while the high demand and the low supply continue, mining companies such as Vale tend to benefit,\u201d says Chinchila.<\/p>\n

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