Vale informed on February 15, that there was a fire in one of the transfer houses of the belt conveyor system at its distribution centre in Malaysia. Vale anticipate this will result in a 10 to 15 day stop in operations and note that a planned 10 day shutdown for maintenance was already scheduled for this period.
After the announcement, Alex Griffiths, Wood Mackenzie Senior Research Analyst, commented that
Vale shipped around 1.8 Mt from its Malaysian distribution centre in February 2018 – a very typical month. A 10 to 15 day unexpected shutdown translates to a 0.6 Mt to 1.0 Mt reduction in exports. But we do not think average export volumes will suffer. Losses can now be made up next month.
He continued stating that Vale ships approximately one vessel every two days from Malaysia but the distribution centre is capable of discharging one vessel daily.
In addition, the export berth although has only one ship-loader, it has a nominal capacity of 8.000 tonnes per hour.
Consequently, the analyst supports that if there’s availability in stock, the centre will be in a position to increase March shipments to make up for this loss.
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The capacity of the import berth (10,500 tonnes per hour) surpasses that of the export berth and so stocks can rise during normal operations.
As Vale indicated, a 10-day shutdown was coincidentally planned for this period the most likely outcome is that the company can make up any lost tonnages in March.
He continued stating that if the outage exceeds the 10 to 15 day estimation, Vale will lose 0.06 Mt per day in its shipments.
The majority of material in Vale is Brazilian Blend fines that are to be shipped in China. Alex Griffiths suggests that a delay in shipping would add extra pressure on the segment of the market.
Yet, Vale has announced that the damage was material only. So, the shipments will not be delayed for no more than 15 days.
