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Vale (VALE3) releases its results for the first quarter of 2024 (1Q24) this Wednesday (24), after the market closes. Even though the company has already anticipated part of its operational numbers last week with the production report, which led to some upward revisions in projections, the market continues to keep an eye on the company’s signals and should pay attention to the company’s prospects. be revealed in the earnings call, especially amid the unstable scenario of the Chinese economy.

In the operational preview, the company announced that it had sold 52.6 million tons of iron ore fines in 1Q24 (down 33% compared to the previous quarter, but up 15% compared to the previous year) and 9.2 million of tons of pellets (down 10% compared to the previous quarter, but up 13% compared to the previous year), with sequential data impacted by weaker seasonality, highlighted in a report by Itaú BBA, whose team is led by Daniel Sasson.

Combined sales totaled 63.8 million tons, a 29% drop compared to the fourth quarter. What explains this, mainly, is the rainy season in Minas Gerais, which results in lower production by the mining company. Total production, of 70.8 million tons, represented a drop of 20% in the same comparison.

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Despite the sequential decline, as already mentioned, analysts saw Vale surprising positively after the preview, with increases in both sales and production, on an annual basis and exceeding market consensus. “Vale reported a better than expected operational performance in the first quarter, with solid iron ore shipments (amid a seasonally weaker quarter) implying upside in relation to our estimates”, assessed the XP team, headed by Lucas Laghi.

In part, analysts mention that the better-than-expected performance reflects the advance of S11D, in Carajás, Pará, and also improvement in Itabira. The greater share of ore coming from the North of the country, of higher quality, also explains the higher than expected premiums.

“Realized iron ore prices decreased 15% from the previous quarter and 7% from the previous year, but exceeded our estimates. Vale reported an iron ore price realization of US$ 100.7 per ton, above our estimate of US$ 94”, says Itaú BBA. “The quality premium reached US$2.2 per ton, up from US$1.6 per ton in the fourth quarter.”

The prospects are also due to the better operational performance of the S11D in Carajás, Pará, which reached the highest production in a first quarter since 2020, in addition to stability in the plants in Vargem Grande and Mutuca, and Minas Gerais.

The higher-than-expected volumes and prices led, shortly after the publication of the preview, to a series of reevaluations of the estimates. Morgan Stanley analysts, for example, raised their Ebitda projection (Earnings before interest, taxes, depreciation and amortization) to US$3.2 billion, mentioning that Vale’s performance in ore was more than which offset the weak result in base metals.

Check out LSEG’s projections for Vale’s results: