The Zhitong Finance App learned that Gustavo Pimenta, CEO of VALE.US (VALE.US), the world's leading iron ore producer, estimates that soaring energy and freight costs caused by the Middle East conflict are making about 10% of the supply in the global maritime iron ore market unprofitable.
“The current price should have been slightly higher,” Pimenta said in an interview. “It's not because of supply and demand, but because of freight costs; fuel prices have always been higher.”
Singapore iron ore futures fell below $90 per ton this week, for the first time in two years; due to weak demand from China and sufficient global supply — including new sources such as Simandou (Simandou) iron ore in Guinea — the cumulative decline so far in 2026 was about 15%. Meanwhile, the war-induced sharp rise in energy prices has boosted costs for miners such as Vale.
Prices may rebound as marginal producers curb production due to high costs, Pimenta said. He said that currently about 10% of the unprofitable supply is about 160 million tons, of which about 15 million tons have been discontinued due to rising costs.
Pimenta expects the market to remain balanced, and demand from China and other key markets will remain strong. “China's demand continues to be steady,” he said, adding that other steel-producing countries such as India and Vietnam are “growing strongly.”
The executive is also optimistic about Brazil's policies, regardless of the election results at the end of this month. He said both candidates will support businesses and recognize the benefits of strengthening the industry through measures such as speeding up approval.
Brazilian voters will vote in the presidential runoff on October 25. Current President Luis Inácio Lula da Silva will face Flavio Bosonaro. The latter are conservatives who support deregulation of the environment and push the private sector to develop natural resources. Vale was privatized in 1997, but investors are still wary of the government's influence through gold stocks, while also concerned about policies involving mine approvals and key railway concessions.
Pimenta has been promoting measures to boost mining investment, including speeding up approvals and increasing geological mapping. A review of Brazil's rules relating to the protection of natural caves may clear the way for a number of major projects, including Vale's planned construction of an iron ore mine with an annual production capacity of 50 million tons.