Brazil's iron ore exports decline in May due to China's high inventory - Goldman Sachs

According to news from Rio de Janeiro on June 2, Goldman Sachs stated in its analysis on Tuesday that Brazil's decline in iron ore exports in May may be due to high Chinese steel and iron ore inventories.

Statistics from the Brazilian Ministry of Industry and Trade show that iron ore shipments have fallen for the first time since January.

In May, iron ore exports fell by 35% from April to 15.3 million tons, down 56% from the same period last year.

From January to May, the export of iron ore reached 95.9 million tons, down 17% from the same period of last year.

Goldman Sachs stated that heavy rains in northern Brazil and Chinese port congestion are factors affecting iron ore exports, but the main reason may be increased inventories.

Other analysts interviewed by Estado News Agency stated that they believe that China will deliberately increase its inventory to force Vale, Brazil’s largest iron ore supplier, to cut contract prices in 2009.

Cristiane Viana, an Agora Senior brokerage based in Rio de Janeiro, said that China bought more iron ore in April, far exceeding the speed of its steel production, which would imply increased stocks.

China’s iron ore negotiators are believed to be demanding a 50% cut in iron ore contract prices effective from April 1, 2009, but miners are sticking.