IRON ORE GAINS MOMENTUM AT THE START OF 2026 AND REVIVES POSITIVE EXPECTATIONS FOR VALE

THE INTERNATIONAL IRON ORE MARKET BEGAN 2026 AT A STRONG PACE. THE COMMODITY REACHED ITS HIGHEST PRICE SINCE FEBRUARY, DRIVEN BY EXPECTATIONS OF NEW ECONOMIC STIMULUS IN CHINA AND BY STOCKPILING ACTIVITY AHEAD OF THE LUNAR NEW YEAR HOLIDAY.

FUTURES CONTRACTS ADVANCED FOR A FOURTH CONSECUTIVE SESSION AND APPROACHED 109 DOLLARS PER TON IN THE SINGAPORE MARKET. IN CHINA, THE MOVE WAS EVEN STRONGER, WITH CONTRACTS TRADED IN DALIAN CLOSING THE DAY UP MORE THAN 3 PERCENT, REFLECTING A RENEWED APPETITE FOR COMMODITIES.

ONE OF THE MAIN DRIVERS BEHIND THE RALLY WAS THE SIGNAL FROM THE PEOPLE’S BANK OF CHINA THAT IT WILL KEEP INTEREST RATES AT LOW LEVELS. THIS STANCE TENDS TO SUPPORT ECONOMIC ACTIVITY AND STRENGTHENS EXPECTATIONS OF CONTINUED SUPPORT FOR STEEL INTENSIVE SECTORS SUCH AS INFRASTRUCTURE AND CONSTRUCTION.

BEYOND THE MACROECONOMIC BACKDROP, SEASONAL FACTORS HAVE ALSO PROVIDED SUPPORT. AHEAD OF THE EXTENDED LUNAR NEW YEAR BREAK, IT IS COMMON FOR CHINESE MILLS AND TRADERS TO BUILD INVENTORIES TO ENSURE SUPPLY, ADDING SHORT TERM PRESSURE TO PRICES.

ACCORDING TO ANALYSTS, GLOBAL IRON ORE SUPPLY REMAINS COMFORTABLE, BUT POTENTIAL RISKS ARE STARTING TO BE PRICED IN. LIZ GAO, IRON ORE ANALYST AT CRU, NOTED THAT THERE IS A POSSIBILITY OF SUPPLY DISRUPTIONS IN THE COMING WEEKS DUE TO SEASONAL WEATHER, WHICH COULD PUSH PRICES EVEN HIGHER.

THE RECENT RALLY CONTRASTS WITH PERFORMANCE IN 2025, WHEN IRON ORE POSTED MODEST GAINS. THROUGHOUT LAST YEAR, THE MARKET WAS WEIGHED DOWN BY CONCERNS OVER RISING OUTPUT FROM MAJOR GLOBAL MINERS AND SIGNS OF SLOWING STEEL PRODUCTION IN CHINA.

ON THE SUPPLY SIDE, INVENTORIES AT CHINESE PORTS, THE WORLD’S LARGEST IMPORT MARKET, ROSE TO THE HIGHEST LEVEL SINCE LATE 2024, INDICATING AMPLE AVAILABILITY. EVEN SO, THE START OF 2026 HAS BEEN POSITIVE FOR A BROADER RANGE OF RAW MATERIALS. BASE METALS HAVE SEEN STRONG GAINS, WITH COPPER STANDING OUT AFTER REACHING RECORD PRICES IN THE INTERNATIONAL MARKET.

IN THE LATEST SESSION, IRON ORE ROSE AS MUCH AS 2 POINT 1 PERCENT, HITTING 108 POINT 90 DOLLARS PER TON IN SINGAPORE, WITH SOME REFERENCES INDICATING TRADES NEAR 114 POINT 77 DOLLARS, THE HIGHEST LEVEL IN AROUND FIVE MONTHS.

IMPACT ON VALE SHARES

THE MOVE IN IRON ORE WAS QUICKLY REFLECTED IN VALE SHARES, ONE OF THE HEAVIEST WEIGHTS IN BRAZIL’S IBOVESPA INDEX. IN THE PREVIOUS SESSION, THE STOCK RENEWED ITS ALL TIME HIGH ON A DIVIDEND ADJUSTED BASIS AND CLOSED AT 75 POINT 87 REAIS.

THIS LEVEL ACCOUNTS FOR ADJUSTMENTS RELATED TO DIVIDEND PAYMENTS, SHARE CONSOLIDATIONS AND SPLITS. IN NOMINAL TERMS, THE SHARE PRICE HAS ALREADY SURPASSED 110 REAIS, HIGHLIGHTING THE STRENGTH OF THE CURRENT CYCLE FOR THE COMPANY.

VALE CONTINUES TO PRODUCE AROUND 330 MILLION TONS OF IRON ORE PER YEAR AND IS ALSO ADVANCING ITS EXPANSION STRATEGY IN COPPER, A METAL THAT IS BECOMING INCREASINGLY STRATEGIC IN THE GLOBAL ENERGY TRANSITION.

WITH IRON ORE PRICES RISING AND A MORE SUPPORTIVE BACKDROP FOR COMMODITIES, MARKETS ARE ONCE AGAIN DEBATING THE POSSIBILITY OF NEW ALL TIME HIGHS FOR VALE, EVEN AS VOLATILITY RISKS REMAIN, PARTICULARLY GIVEN THE COMPANY’S DEPENDENCE ON THE PACE OF THE CHINESE ECONOMY.