The average iron ore market reference price for 62% Fe in the 2Q20 was US$93.30/t, a 4.8% increase in relation to average of US$89.00/t in the 1Q20.

In the second quarter, Chinese economic activities resumed growth after impact resulting from the outbreak of COVID-19. After a 2% drop in the crude steel production in March, annual comparison, and stability in April, Chinese steel production set a new monthly record.

Strong Chinese demand coupled with supply uncertainty of ore-producing countries, such as Brazil, Canada, South Africa, Peru and Chile, resulted in a decline in the inventory levels in Chinese ports and, consequently, in the increase in the prices practiced.

The average spread between 65% Fe price and 62% Fe ores was US$15.02/t in the 2Q20, slightly higher than the average in the 1Q20 of US$14.52/t. Supply uncertainty also contributed to price increases in high content iron ore, while the resumption of Chinese domestic production of concentrate limited, in part, the price hike.

Ocean freight reached an average price of US$11.82/t in the 2Q20, against US$13.79/t in the 1Q20, a 14.3% drop. The decrease in iron ore exports in Brazil affected the demand for vessels in the Tubarão-Qingdao route, and this decline, added to the decline in the price of petroleum, contributed to the decline in rates practiced.

Operational and Sales Performance – Iron Ore

In the 2Q20, production volume was 2.0 million tons, a 6.7% decrease over that in the 1Q20 (2.2 million tons), mainly as a result of a scheduled stop at one of its beneficiation plants, for maintenance and equipment changes.

Sales volume was 1.9 million tons in the 2Q20, a 14.1% decrease over that in the 1Q20 (2.2 million tons), in accordance with the volume produced in the quarter and a recovery in inventories.

Iron ore production and sales volumes are shown below:

In the 2Q20, export sales by shipping term was 79% CFR and 21% FOB, against 72% and 28% in the 1Q20, respectively.