A Vale executive told participants of the Alacero conference, which is being held in Rio, Brazil, from October 25-26, that rising demand for pellets should continue in 2017.
Paulo Salles, director of South America ferrous sales at Vale, said Samarco accounted for nearly 25 percent or about 30 million mt of the world’s total pellet production.
In a panel entitled “Raw materials: How to strengthen the competitiveness?” the executive said Vale understands that supply and demand for pellets is currently “very tight."
“The pellet market should see a sustained deficit between supply and demand,” he said, noting that supply won't be able to meet demand, likely through 2017. However, both supply and demand should continue to rise.
“There has been increased pellets demand as coal prices rose. Mills need to increase their competitiveness using a richer mineral, so they opt for pellets,” he explained.
The Vale executive also echoed what other panelists said about Brazil: “Despite the still bearish outlook for Brazil in 2016, prospects have been improving, indicating the bottom is behind us.”
“The intensity of the decreases [in the economy and on the steel market as well] has diminished. Maybe the worst has gone. Brazil is recovering to full stability and should restart its economic growth, even in a gradual way,” said Alexandre Lyra, president of the IABr directing council, in a separate presentation.
Commenting on Vale’s S11D project, Salles said the project should start producing by December this year. By January, it should send its first iron ore shipment. The S11D project will produce 100 percent sinter feed, Fe 65 iron ore.
Output is expected to increase gradually, starting at 156 million mt, and then increasing production by 22 million mt in 2017, 31 million mt in 2018, 12 million in 2019 and 12 million by 2020, accounting for a total of 233 million mt of the commodity.
Combining the 233 million mt output with Vale’s South System capacity of 220 million mt, it should reach over 450 million mt in total iron ore capacity by 2020.