martes, junio 23, 2015

Vale 2q15. Parte II.

El price realization del segmento i.o. va a ser mucho mejor que en 1q.

En lugar de restarle usd7,7 al precio que cobramos por los sistemas de precios, puede preverse este quarter que se le van a sumar unos 3 usd...

El promedio trimestral viene por ahora en unos 58usd por tonelada de iron ore.

En lugar de perder 450 musd por los pricing sistems, vamos a ganar unos 220 palos.

Si se queda en 58, esa ganancia de 220, se va a cubrir el peor precio ( en 1q era 62,4)...

Lo que nos queda son los 450...nada mal.

Anexamos respuesta de Vale Investor relations, que explica esta imagen en detalle:

On the 1q15 presentation, the slide about the price realization on iron ore shows 7,2 usd as freight, is that the average cost of freight of all the sales of vale in the quarter, including that made in to the Brazilian market? I know that the freigth to china is at 17,8-19,5 usd/ that slide bring me some doubts. 

This slide has been bringing some doubts. It seems the freight cost was 7$/t, but that is not the case.

Our freight cost for iron ore in 1Q15 was US$ 628 million and you can consider an extra US$ 84 million which was the cost of bunker oil hedge (bunker is the oil used in vessels). Just for your reference these numbers are on page 21 of our Earnings Report 1Q15, Iron ore COGS table. So total cost was US$ 712 million.

We sell ~60% of our iron ore on CFR basis (the remaining 40% are FOB sales), so from the 62Mt of iron ore sales, only 36.6Mt is accounted as a freight cost for vale.

So, cost for ton in 1Q15 was 19.5 $/t. Again for your reference you can see this value on page 22.

Now, let me explain the chart on the presentation. The reference price of iron ore is the price in China. The 62.4$/dmt is the average iron ore price in 1Q15 of dry metric tons in China. The bars following this average are showing the amounts we lost or gained due to some condition.

Thinking about the freight, consider that:

1.      our realized price was 46$/t, and it includes CFR and FOB sales.

2.      From the FOB sales we charge prices with a discount of freight as we are not providing the service.

3.      The freight used to give the discount comes from a contract, so it may not reflect the current market conditions. Our freight cost in contracts have been around 20$/t which can be adjusted according to bunker oil fluctuations.

4.      Considering that freight cost was 20$/t, and we sold 38% on FOB basis, we had a discount of ~7.5$/t in our price.

Just as an illustration, if we sell 100% on FOB basis, we would have revenues which accounted for iron ore prices at the ports in Brazil, which would probably be estimated with a discount over the reference price in China due to the freight cost to bring the product to China. On the other hand, if we sell 100% on CFR basis, our prices would have only discounts due to humidity, quality, and price adjustments due to different types of contracts. So what lead us to adjust to the freight is our FOB sales.

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