Vale may set new annual record for iron ore production

Vale SA, the world's largest iron ore miner, said its second-quarter output exceeded analysts' expectations, keeping the likelihood of a new annual production record high.

Iron ore output was 86.8 million tonnes, the Rio de Janeiro-based company said in a statement. Vale was expected to produce 86 million tonnes, according to an average estimate of five analysts. Iron ore production fell from a record 89.3 million tonnes in the second quarter a year earlier, as one of Vale's joint ventures closed last year after a dam break in November caused a fatal accident.

Vale's production expansion targets, amid global oversupply, are considered highly achievable as the company plans to ramp up production in the industry's largest development project at Karajas in the second half of 2016.

Benchmark iron ore at 62 percent rose 2.6 percent to $ 57.17 a tonne on Thursday, according to Metal Bulletin Ltd. The highest was $ 70.46 per tonne on April 21 this year, reached since January 2015. However, iron ore may fall to $ 40 a tonne in the fourth quarter, according to Goldman Sachs Group Inc., while Morgan Stanley's forecast for the same period is $ 35 a tonne.

Following record levels of industrial metals last year, Vale reported nickel production of 78,500 tonnes in the second quarter, up 17 percent from a year earlier. Copper output was 107,400 tons, up 2.4 percent from last year.