Brazilian iron ore producer Vale predicted a decline in the average production cost of the commodity that is delivered in China in 2015, according to media reports.
In a meeting with investors in the city of Belo Horizonte, in the state of Minas Gerais, the company said average production cost for the product in 2015 is expected to reach between $37/mt and $41/mt.
Earlier this week, the company’s CEO, Murilo Ferreira, predicted Chinese production of high quality iron ore containing 62 percent Fe should be below 200 million mt this year. In 2014, output of the product reached 240 million mt.
Ferreira said Chinese iron ore market should improve in the second half of the year when compared to the first six months of 2015. “China [has] cut interest rates three times and [has] reduced the levels of compulsory deposits,” he said.
The executive’s comments show the optimism of the Brazilian iron ore producer, which on Thursday was seen by credit rating agency Moody’s as “well positioned to handle lower iron ore prices,” despite a deterioration at its credit metrics.
“Vale’s credit metrics will deteriorate amid weaker market fundamentals through mid-2016,” Moody said. However, Vale is “to a point, well positioned to tolerate the lower prices for iron ore and base metals and has a solid credit profile, reflected in its Baa2 rating,” the credit rating agency said.