LatAm Mining VALE, CMIN & USIM Sensitivity To Freight Oil FX Commodities

Equity Research 17 September 2026 | 7:41AM BRT

LatAm Mining: VALE, CMIN & USIM Sensitivity To Freight/Oil/FX/Commodities

The surge in Brazil-to-China (C3) Capesize spot freight to $40/t (>100% above its Marcio Farid | 10-year average) alongside Brent crude rallying to $103/bbl has driven Brazilian and Goldman Sachs do Brasil CTVM S.A. Australian FOB netbacks to 8-year lows. The GS mining team recently updated the Emerson Vieira iron ore cash cost curve and noted that marginal costs have moved to ~US$95/t | (from $75/t in 2024). Goldman Sachs do Brasil CTVM S.A.

Henrique Marques With CFR China benchmark iron ore holding steady around $95-100/t, elevated | logistical and fuel costs have the potential to erode mining margins for unhedged Goldman Sachs do Brasil CTVM S.A. producers while rewarding operators with multi-year fixed logistical structures.

We run a sensitivity analysis for freight, oil, FX, and commodities for the iron ore miners we cover. We note Vale’s resilience in a high freight/oil scenario due to significant contract coverage and hedging, with CSN/CMIN and Usiminas being the most exposed due to 100% spot exposure.

We see 15% 2027 EBITDA downside vs. consensus for Vale at spot and 3% on forward curves. We would see 21-42-109% downside for USIM/CSN/CMIN at spot and 20-21-59% on forward curves. Both CMIN and Usiminas’ mining segments would deliver negative EBITDA at spot, and Usiminas even at fwd rate curves (not considering the impact of the Samambaia idled plant).

Vale’s long term contracts and hedge protection: Vale is uniquely positioned across Latin America. We assume 75% of its long-term volume is contracted at a structural rate similar to last 10y (~$18/t C3 vs. $42/t spot) under 5–10 year charter agreements. For 2027, Vale holds ~90% contracted cover in 1H27 (10% spot) and 75% cover in 2H27 (25% spot), resulting in a full-year weighted spot exposure of only ~20%. Furthermore, Vale has hedged 70% of its 2027 oil exposure via forwards.

Severe margin compression for CSN Mineração and Usiminas at spot: CSN Mineração (40–45 Mtpa shipments) and Usiminas (MUSA, ~9 Mtpa capacity) operate with 100% exposure to spot freight and unhedged energy prices. At $40/t spot freight and $103/bbl Brent, CSN’s delivered all-in landed cost escalates to $97/t CFR China (grade-adjusted), eroding unit EBITDA margins down to below zero. Usiminas has already idled its Samambaia plant (a 30% capacity curtailment) as exports breakeven breached $115/t CFR.

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Exhibit 1: Companies EBITDA ($ mn/ R$ mn) and EBITDA Break-even ($/t) at different FX and commodities price scenarios

Sensitivity @ ∆ % vs. Fwd Sensitivity @ Companies Sensitivity VA. Cons. ∆ % vs. Spot Fwd Curve Curve Spot EBITDA Consolidated Vale ($ mn) 2027 EBITDA 15,705 15,258 -3% 13,424 -15% 2028 EBITDA 16,403 15,587 -5% 12,888 -21% CSN (R$ mn) 2027 EBITDA 11,926 9,468 -21% 6,944 -42% 2028 EBITDA 13,952 11,162 -20% 8,362 -40% Usiminas (R$ mn) 2027 EBITDA 3,100 2,467 -20% 2,442 -21% 2028 EBITDA 3,305 2,019 -39% 2,517 -24% EBITDA Breakeven Vale IO Fines ($/t) 2027 EBITDA break-even n.a. 59 n.a. 63 n.a. 2028 EBITDA break-even n.a. 56 n.a. 65 n.a. CMIN ($/t) 2027 EBITDA break-even n.a. 85 n.a. 97 n.a. 2028 EBITDA break-even n.a. 78 n.a. 95 n.a. USIM Mining ($/t) 2027 EBITDA break-even n.a. 100 n.a. 115 n.a. 2028 EBITDA break-even n.a. 93 n.a. 118 n.a.

Source: Goldman Sachs Global Investment Research, Visible Alpha Consensus Data

Exhibit 2: Assumptions used for the Fwd curve and Spot scenarios Assumptions 2027E 2028E Variables Fwd Curve Spot Fwd Curve Spot Iron Ore 96 95 93 95 Freight 30 42 26 42 Oil FX Copper 14,106 14,021 14,145 14,021 Nickel 16,359 15,818 17,028…