How can the market react to Vale’s production data (VALE3) this Wednesday?

Vale’s ADRs fall in the after market in New York following release of production and sales data (Image: Bloomberg)

THE OK (VOUCH3) reported production figures for fines of iron ore slightly lower than expected in the fourth quarter of 2022, given the expectations of the analysis team at Activate Investments.

The broker had a forecast of 83 million tons of iron ore, against the 80.8 million tons presented by the mining company in the production and sales report for the period.

“We have a marginally negative reading of the number presented and we believe that the greater need for purchases from third parties may prove to be a detractor of margins in this fourth quarter of 2022”, evaluates Ilan Arbetman, in a report published this Tuesday (31), shortly after the disclosure of the report.

Vale said that there was a reduction in production in the Northern Systemmainly explained by the seasonally higher levels of rainfall and the performance of Serra Norte.

Us Southeast and South Systems, production also dropped quarter after quarter, with the impact of rains in the region of Minas Gerais. The performance of the Southeast was still affected by the planned maintenance of the Alegria mine equipment, while the results of the Southern System were impacted by lower purchases from third parties.

In the year, Vale accumulated a production of 307.8 million tons of iron ore, below the projection of 310 million tons of the steelmaking ingredient for 2022.

Regarding iron ore sales, Ativa believes that the numbers came in line. Arbetman explains that, historically, the fourth quarter concentrates the greatest gap between sales and production.

“This year, we saw a gap in line with expectations and close to that recorded in the fourth quarter of 2021”, says the analyst. Sales of iron ore fines and pellets totaled approximately 90 million tons in the last three months of the year.

As for the data of nickel and copper, production is still below expectations. Despite this, Ativa sees positive signs in the numbers – mainly in the level of nickel sales and, in the copper division, in the improvement in the performance of the Sudbury, Thompson and Voisey’s Bay mines and the start-up of Salobo III.

“In addition, the company liquidated inventories in the fourth quarter of 2022 and, therefore, should see a greater contribution from the segment in the margins”, completes Arbetman.

In the analyst’s evaluation, the base metals da Vale is beginning to show greater signs of its monetization power.

And the market reaction?

By general reading, Ativa adopts a neutral perception on the data disclosed by Vale. For the brokerage, the operating figures for the fourth quarter of the mining company should be received in a moderate tone by the market, even with annual production ending below the guidance.

“In iron ore, the way the company placed value on volume in its Vale Day promoted in early December gave the impression of the possibility of not reaching the target. guidance current market, which should not scare the market”, comments Arbetman. Ativa has a Buy recommendation for the name.

Vale’s ADR (VALLEY) retreated 0.27% in the after market of the New York Stock Exchange, after closing at a high of 0.92%. At B3, the company’s shares marked the third consecutive session of decline.

Source: Moneytimes

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