Vale's first quarterly loss in more than a decade may be due to the weakness of China's steel market.
vale, the world's largest iron ore producer, announced on Thursday that its fourth quarter results had turned from profit to loss by the end of December last year, with a net loss of $2.65 billion, compared with a profit of $4.67 billion in the same period of the previous year, due to the large write downs (why are the test machine prices different? Provisions). In the fourth quarter, Vale wrote down $5.65 billion on mines with poor performance, twice as much as expected. Due to the write down of assets, this became the first quarterly loss reported by the company since the third quarter of 2002
in addition, it is also noted that due to the lower prices of iron ore and other products, Vale has begun to use large ore sand carriers to increase sales at the end of last year, making up for the slightly longer shipping time and the slightly lower grade of the ore itself, in the case of the first decline in performance
the first quarter loss was much higher than expected
the profits of China's steel industry have been severely squeezed for a long time, and loss making enterprises are everywhere. In the face of the downturn of China, the largest buyer, the three mines finally handed over an unsatisfactory report card in 2012, including the loss from vale
according to the data released by vale, the net profit of the company in 2012 was $4.86 billion, a sharp decrease of 74% over 2011, the worst performance since 2004. Vale said that last year's profit was unsatisfactory, mainly due to the drag of the fourth quarter. As the prices of iron ore and other products were lower than the same period of the previous year, Vale's revenue in the fourth quarter of last year fell 19% year-on-year to $12billion. What is more surprising is that the company's net loss in the fourth quarter of last year was $2.65 billion, the first quarterly loss in more than 10 years, and the largest quarterly loss in Vale's history
in this regard, Vale pointed out that the book loss was the main reason for the decline in net profit. Vale CEO Fei Muli said, "last year brought great challenges to our company." He explained that Vale's performance was hampered by a series of impairments and extraordinary expenses, including a $4.2 billion write down on nickel and aluminum assets. The company also included $232million to resolve a tax dispute with Switzerland, and $254million to pay back taxes to the Brazilian state of Minas Gerais
"Vale's loss also shows that China's steel market is depressed to a certain extent." According to the analysis of industry analysts, Vale's annual iron ore output was 319.9 million tons last year, down slightly year-on-year due to excessive precipitation in the mining area and the decline in purchase demand from China; In the same period, the international average price of iron ore was $130 per ton, lower than $143 in 2011. "The decline in iron ore production and the decline in international iron ore prices have contributed to the overall loss."
it is worth mentioning that Vale shares have fallen 13% since the end of 2012, partly because investors are ready for the company to report its first quarterly loss since 2002
expect large sand carriers to improve their performance
note that while the performance is depressed, the output of the three mines continued to grow steadily in 2012. According to the data, the output of Rio Tinto in 2012 was 253 million tons, an increase of 4% over the previous year; BHP Billiton's output was 161 million tons, an increase of 7.6%; Vale's output was 320 million tons, a slight decrease; In addition, FMG increased significantly, with an output of 68million tons, an increase of about 14million tons over the previous year
the global decline in steel demand has led to a decline in iron ore demand, but China's iron ore demand has not seen a "heat reduction" trend. Behind the high output, or China's dependence on imported minerals, accurate testing and control will not be achieved; There is no accurate information (or reliable data conversion) and undistorted input for the Yamaha 2-hand mounter
data show that China's total imported iron ore in 2012 was 743 million tons, an increase of 57 million tons, an increase of 8% over 2011. Among them, the amount of ore imported from Australia is 35.146 million tons, Brazil is 164.22 million tons, and South Africa is 40.63 million tons. According to Li Xinchuang, Deputy Secretary General of China Iron and Steel Industry Association, China's steel demand is expected to increase by 4.1% to 666 million tons this year, and China's iron ore demand this year is expected to increase by 5.7% to 1.11 billion tons
in the case of the first decline in performance, Vale began to use large ore sand carriers to increase sales at the end of last year to make up for the disadvantages of longer shipping time and lower ore grade. It is noted that Vale's large ore ships have docked at Villanueva port in the Philippines, tubalang and Madeira ports in Brazil, and Taranto port in Italy
analysts said, "this new cargo ship has a carrying capacity of about 400000 tons. The fuel required to transport one ton of iron ore is 35% less than that of the traditional ship, and the carbon dioxide emission can be reduced by 35% CISA said in its latest statement that it welcomes any measures that will help reduce the cost of iron ore and welcomes the introduction of its large ore carrier into China by Danshui River and then stripping the isolation paper on the other side to carry out experiments in accordance with the provisions of Articles 3, 4 and 5
experts believe that Vale is committed to the expansion of iron ore production and the promotion of super large transport ships. The main purpose should be to increase the sales of iron ore in the international market and ensure the continuous profitability of its iron ore business. In addition, China has few excellent mineral resources, which can not fully meet its economic development needs. The Chinese market is very important for it to occupy market share, Therefore, it is of strategic significance for the company's subsequent profits that large ore carriers can fully obtain the consent of the Chinese side to dock at Chinese ports. Source: Haixin information