Vale announced Q2 2022 iron ore production of 74.1 MMT, which is up from 63.9 MMT in Q1 (or 16%) and which compares with 75.7 MMT in Q2 2021 (-2%). Iron ore sales corresponded to 87% of Q2 production, which is up from 84% in Q1, and which compares the 2020 and 2021 average of 88% and 85%, respectively. Of note, Vale lowered its iron ore production guidance from 320-335 MMT to 310-320 MMT, of which 3.5 MMT was related to the sale of its Midwestern System, while the remainder relates to maintaining greater flexibility in its production due to current market conditions. For the remainder of the year, Vale’s iron ore guidance thus suggests a daily production level of 967k tonnes per day (or 986ktpd if including the production from its Midwestern System), which suggest an uptick of 27% from H1 when the company produced 710ktpd in Q1 and 806ktpd in Q2, respectively.

Downward revisions to Vale’s production targets are definitely not bullish in terms of dry bulk trade volumes, but the outlook for H2 still leaves a considerable upside to recent activity levels and is still supportive of dry bulk tailwinds for the coming months in our view as we enter the seasonally stronger part of the year.