Marcelo Bacci reports strong operational resilience despite cost headwinds from oil prices and freight. Balanced iron ore markets have allowed prices to rise with costs, preserving margins. China demand remains robust with a shift from construction to consumer goods. Vale is confident in annual guidance and may decide on extra dividends/buybacks in H2 2025.
He notes oil prices are a key cost driver and that they have hedged, implying expectation of sustained high oil prices.
Asks about Vale's exposure to the Middle East conflict and supply chain adjustments.
Francine Lacqua
Marcelo Bacci
60% of volumes go to China; Middle East is not too relevant for Vale's results.
Asks what investors should focus on going forward.
Francine Lacqua
Marcelo Bacci
Costs went up but the balanced market allowed prices to rise proportionally, preserving margins. Monitor oil prices and China demand; we are confident in the coming quarters.
We hedged fuel costs months ago, reducing the impact.
Asks how Vale can stick to annual guidance despite cost pressures.
Francine Lacqua
Marcelo Bacci
Strong demand and a balanced market mean prices respond to industry-wide cost increases. Margins are not a concern as long as the market remains balanced.
Prices moved from ~$100 to $108-109, matching cost increases.
Asks about special dividends and buybacks.
Francine Lacqua
Marcelo Bacci
Decision for H2 2025. Strong cash flow from market dynamics; additional cash will go to shareholders via dividends or buybacks depending on conditions.
Capex is ~$6B and not changing much.
Asks about real demand for iron ore in China.
Francine Lacqua
Marcelo Bacci
Very robust. Demand composition has shifted from construction to exports and consumer durables (cars, refrigerators). Total demand remains strong.
Europe is weaker but that's a continuation of a trend.
Asks about the impact of a prolonged war on global demand.
Francine Lacqua
Marcelo Bacci
Main concern is a long war leading to demand destruction from high costs/prices. If the trend continues, things are normal, but we must be careful about the war's length.
Asks about China's push for more influence in iron ore pricing via CMRG.
Francine Lacqua
Marcelo Bacci
Positive relationship with CMRG; normal buyer-seller disputes. No disruption expected in the decades-long relationship with China.
Asked about China's push for more influence in iron ore pricing via CMRG.
Francine Lacqua
Marcelo Bacci
We have a positive relationship with CMRG. It's a normal dispute between buyers and sellers. We've been selling to China for decades and don't expect disruption.
