VALE, the second-biggest iron ore producer in the world, has some catching up to do after first quarter of the year sales slipped 7%.

While iron ore production rose 6% to 66.8m tonnes compared with the corresponding period a year earlier because of a stronger performance at its S11D plant and better weather conditions in Minas Gerais, both fines and pellet sales declined 7% to 54m tonnes due to loading restrictions in the Northern System during the rainy season, as well as unscheduled maintenance of port equipment, the miner said in a report.

Vale said it expects to offset this impact in the second half of the year keeping its annual sales plan unchanged.

It is maintaining its full-year production guidance between 310m-320m tonnes and will have to produce at least 243m tonnes over the course of the year to meet the lower end of that range. 

Arctic Securities said that keeping output unchanged implies a growth rate of -1%, 1% and 3% for the balance of the year versus the corresponding quarters last year based on the low, mid-range and high point of the guidance. 

“The fact that the second half of the year is expected to bridge the sales-to-production gap should be a positive read for the dry bulk market, although it is difficult to quantify the impact,” the Norwegian investment firm said in a note.

According to cargo-tracking firm DBX Commodities, loadings in Brazil totalled 6.45m tonnes last week, a gain of 30% from the previous seven days, while volumes from Australia fell 35% to 11.69m tonnes.

Discharges in China rose 12% to 22.5m tonnes over the same period.

China is the biggest offtaker of iron ore and the fact that its economic recovery looks to be in full swing will be good news for the dry bulk market. 

The economy grew by 4.5% in the first quarter, beating expectations, and is on target for 5% growth for the full year.

However, the growth was led by consumer spending rather than industrial production, said Shipfix senior economist and quantitative analyst Ulf Bergman.

“Disappointing industrial production during March suggest that the road ahead may not be without its challenges for the Chinese economy,” he said in a note. “The country’s appetite for imported commodities may not be as strong as when China reopened after the first round of lockdowns in 2020.”

The current month has started off on a slow trajectory, which may indicate that economic growth rates could lose some momentum during the summer, he said.