Brazilian ore exports fell by 22.8% in Q1, affected by the Chinese cut in importsApr, 27, 2022 Posted by Gabriel Malheiros
In the first quarter of this year, Brazilian ore exports fell by 22.8%. The reduction occurred primarily because of China’s sharp decrease in imports, which fell by 31% in the first three months of this year compared to the same time in 2021.
According to the Brazilian Mining Association (Ibram), Brazil’s mining industry saw a decline in performance in the first quarter of 2022. Production, which decreased by 13% to 200 million tonnes, and income, which fell by 20% to R$56.2 billion, were also down from the previous year. Exports fell by 22.8% towards the end of the quarter.
As the sector’s latest quarterly balance sheets showed increasing output and billing, two factors played a significant role in reshaping the industry’s dynamics. The first has to do with China, Brazil’s largest importer of ores. “As a result of the Winter Olympics, we saw a drop in production from Chinese steelmakers.” The Chinese government was determined to enhance environmental conditions for the athletic event. “There was also more pricing control on China’s part,” said Raul Jungmann, CEO of Ibram. The organization also calls attention to the isolation measures that have been implemented in numerous places across China to prevent a Covid-19 outbreak.
The second element that significantly impacted the sector’s performance was the heavy rainfall that hit Minas Gerais in January. More than 200 millimeters of rain fell in less than two days in some places. As a result, several operational units were shut down as a precaution or maintenance, impacting production. In addition, the Public Ministry of Minas Gerais (MPMG) recommended preventive intervention in 18 structures.
See below the track record of Brazilian iron ore exports to the international market compared to Brazilian exports to China alone. The period analyzed was the entire year of 2021 and the first two months of 2022. The data is from DataLiner.
Brazilian Iron Ore Exports (General) vs. Iron Ore Exports (to China) | Jan 2021 – Feb 2022 | WTMT
The reduction in the sector’s performance throughout the quarter influenced government revenue collection. According to the data, mining businesses paid 20% less in taxes and 25% less in royalties in the first three months of 2022 compared to the same period in the previous year.
For Ibram, the quarterly performance is linked to the cyclical nature of mining operations, influenced by weather seasonality. With the end of the rainy season approaching, a minor improvement is expected in the following months. Despite the decrease in output and income, the mineral trade balance, which is the difference between ores exports and imports, was US$ 6.2 billion, according to the organization.
“Even if the results fall short of expectations, ore exports produce foreign exchange income that the nation cannot afford to lose,” said Jungmann. Iron ore, the flagship of Brazilian mineral production, accounted for 95% of ore exports in tonnes and 68% in dollars. In addition, it was responsible for 58% of the entire industry’s revenue. Gold accounted for 11%, copper for 9%, and other minerals for 22%.
Source: Comex do Brasil
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