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CSN Mineração S.A. (CMIN) reported a strong performance in Q2 2025, with significant improvements in financial metrics and operational efficiency. The company posted an adjusted EBITDA of R$1.268 million, reflecting a robust EBITDA margin of 37.2%. Net revenue reached R$3.4 million, marking a 5% increase compared to Q2 2024. The stock showed a slight increase, with a 0.18% rise, closing at R$5.64. According to InvestingPro analysis, the company maintains impressive gross profit margins of 47.34% and currently trades at an attractive EV/EBITDA multiple of 4.29x, suggesting potential undervaluation relative to peers.
Key Takeaways
- CSN Mineração achieved a record production of 11.6 million tons, a 11.3% year-on-year growth.
- The company reversed its previous quarter’s loss, reporting a net income of R$116 million.
- The P15 Expansion Project is set to enhance product quality, with a premium potential of $30 per ton.
- Full-year production guidance remains strong at 42-43.5 million tons.
Company Performance
CSN Mineração demonstrated resilience in Q2 2025, reversing the previous quarter’s losses and achieving a positive net income. The company’s focus on operational efficiency and cost control has been evident, with a notable reduction in C1 cash costs to $20.8 per ton, a 1% decrease from Q1 2025. The production and sales volumes saw significant year-on-year growth, underscoring the company’s competitive edge in the iron ore market. With a market capitalization of $5.59 billion and a strong financial health score rated as "GREAT" by InvestingPro, the company stands out among its peers in the metals and mining sector.
Financial Highlights
- Revenue: R$3.4 million, a 5% increase from Q2 2024
- Adjusted EBITDA: R$1.268 million, with a margin of 37.2%
- Net Income: R$116 million, reversing a previous quarter’s loss
- Adjusted Free Cash Flow: R$768 million
- Net Debt: R$14.4 billion
Outlook & Guidance
Looking ahead, CSN Mineração maintains a positive outlook with a full-year production guidance of 42-43.5 million tons. The company is focused on cost control and efficiency improvements, with the P15 Expansion Project as a key growth driver. The project, expected to complete by Q4 2027, is anticipated to enhance product quality significantly. InvestingPro data reveals the company’s strong shareholder focus, with a significant dividend yield of 14.29% and consistent dividend payments for five consecutive years. For detailed analysis and additional insights, investors can access the comprehensive Pro Research Report available on InvestingPro, covering this and 1,400+ other top stocks.
Executive Commentary
CEO Benjamin Steinbruch emphasized the company’s strong operational performance, stating, "We’re producing well. We’re producing at a low cost." He also expressed optimism for the upcoming quarters, noting, "The third quarter will be better than the second quarter."
Risks and Challenges
- Fluctuating iron ore prices could impact revenue and profitability.
- Dependence on the Chinese steel market, which may face demand fluctuations.
- Execution risks related to the P15 Expansion Project, including potential delays or cost overruns.
- Macroeconomic pressures and currency fluctuations could affect financial performance.
Q&A
During the earnings call, analysts inquired about strategic asset positioning and cost control initiatives. The company provided insights into its prepayment contract strategy and analyzed the dynamics of the Chinese market, which remains a critical factor for CSN Mineração’s success.
CSN Mineração’s Q2 2025 results reflect a strong operational and financial performance, with the company well-positioned for future growth amidst potential market challenges.
Full transcript - CSN Mineracao SA (CMIN3) Q2 2025:
Conference Moderator, CSN Mineração S.A.: Good afternoon and thank you for holding. At this time we would like to welcome everyone to CSN Mineração S.A. Earnings Conference call for the second quarter 2025. Today we have with us the company’s executive officers. We would like to inform you that this event is being recorded and all participants will be in listen-only mode during the company presentation. In this, we will go on to the question and answer session when further instructions will be provided. You can access this event at ircsn.com.br where the presentation is also available. The replay of the event will be available soon after closing. Before proceeding, we would like to state that some of the forward-looking statements herein are mere expectations or trends based on the current assumptions and opinions of the company’s management. Future results, performance, and events may differ materially from those expressed herein, which do not constitute projections.
In fact, actual results, performance, or events may differ materially from those expressed or implied by forward-looking statements as a result of several factors such as general and economic conditions in Brazil and other countries, interest and exchange rate levels, future rescheduling or repayment of debt pegged to other currencies, protectionist measures in the U.S., Brazil, and other countries, and laws and regulations and general competitive factors at a regional and national level. We will now turn the floor over to Mr. Pedro Oliva, CFO, who will refer to the highlights of CSN Mineração S.A. during the period. You may proceed, sir. Good afternoon. I would like to thank all of you for your attendance at the earnings call for CSN Mineração S.A.
We’ll begin with the highlights for the second quarter 2024 where the company reached a new production record with 11.6 million tons, representing a growth of 11.3% vis-à-vis the second quarter 2024. CSN Mineração S.A. reached a sales volume of 11.8 million tons, record sales for a second quarter and the second best indicator in the company’s history regarding sales, with a growth of 9.6% versus the same period last year. The company had a C1 cash cost of $20.8 per ton, a drop of 1% compared to the $21 in the first quarter 2025. This was possible despite the valuation of the exchange rate because of the cost control of the company. I would like to underscore that between January and June of this year the company is working with less than $21 when the guidance is between $21 and $23.
The combination of these positive factors, cost control and the drop of iron ore, led to an adjusted EBITDA of R$1.268 million with a margin of 37.2%. Adjusted free cash flow of R$768 million. In the next slide we have production volume and inventories. We produced 11.6 million tons in 2Q25, a growth of 13.6% vis a vis 1Q25 and 11.3% year on year. This represents a new record and reflects the company’s operational efficiency and the higher purchasing volume during the period compared to the first quarter of 2025. The 13.6% increase was driven by a drier period that is characteristic for the quarter. Even with a record production, the decline in inventories was 7.4% in the quarter to 3.6 million tons, reflecting the strong sales volume in the second quarter. On the following slide we have the sales information for the company.
We reached 11.7 million tons, a growth of 11% vis a vis the same period last year and 7% growth when compared with the previous quarter. This figure represents a historical record for the company for the second quarter and the second best in its history for any quarter, reflecting the company’s operational excellence and logistics optimization. Net revenue of R$3.4 million was 5% higher than 2Q24 and stable compared to the previous quarter. This was possible because of the operational enhancement that offset the decline in iron ore prices. In the next slide we see price realization. Unit cost was $10 lower than the same period and the previous quarter explained by a drop in Platts. Platts dropped $5.80 to $97.76 and Platts also had an impact of $1.60 negative in the QP basket and the same for previous periods.
Besides this factor, the quality was $1 greater of adjustment 14.6 to 15.6 in the period and sea freight increased $1.11 per ton to $20 per ton. In the next slide we see the COGS and depreciation of R$2,066,000,000. Growth of 6.3% vis a vis the previous quarter showing a higher production pace and an increase in third-party purchases and sales during the period. Unit cost dropped because of the higher sales volume and as well with a greater volume of owned production that dropped 29% to 26% in the period. The EBITDA we have a drop of 11.5 percentage points in the margin compared to the same period in the second quarter 2024, this due to a decline in the price of iron ore offset with excellent operating results, production record, logistics efficiency and a sound cost control.
The reconciliation of adjusted EBITDA shows that the drop of EBITDA in the period vis-à-vis the previous quarter occurred despite an increase in volume and improvement in mix, larger owned production, and cost reduction, especially because of the drop in prices with an impact of R$506 million and the impact of R$98 million as a price provision from previous quarters, but also due to the increase in sea freight. As we mentioned, there was a growth of $1.11 per ton with an impact of R$85 million negative. Now regarding our investments, it’s important to underscore that the company reached R$500 million in the quarter. We had anticipated this at the last earnings call.
The growth of 32.6% had been foreseen and the highlight was the growth of CapEx for business expansion of R$141 million in the first quarter to R$214 million in the second quarter, a growth of 50% which can be explained because of the progress in the P15 expansion project works. Regarding the net working capital, the company went from R$188 million in the previous quarter negative to R$981 million, explained by the increase in suppliers and a reduction in accounts receivable, the impact of the tropical flats, and a valuation in the exchange rate. In the following slide, we see our indebtedness profile which is quite lengthened for the company. To the right, the net debt and leverage, CSN Mineração S.A.
ended the second quarter with a total of R$14.4 billion as availability, stable vis-à-vis the previous quarter, and because of greater cash generation and a new prepayment contract, the net cash position went on to R$4.6 million with a leverage negative of 0.80 times. The adjusted free cash flow was positive by R$768 million because of the release of working capital and lower impacts. In our financial result on the next slide, we present to you the information on net income. CSN Mineração S.A. recorded R$116 million for the quarter, reversing the net loss recorded in the previous quarter. This is primarily due to the lower impact of the exchange variation on cash in foreign currency and higher sales volume. Despite the impact of exchange variation that was lower, it was still very representative with an impact of R$528 million.
The exchange rate went from 5.74 to 5.60 and because of our cash position of R$2.46 million at the end of the second quarter of 2025. As we usually do, we conclude the presentation with the ESG highlights. In governance, I think it’s worthwhile underscoring an evolution of the FTSE Russell of 2.9 to 3.4 and maintaining the listing of FTSE4Good. 26% of women’s representation, surpassing the goal we had set forth for 2025, and an 8.7% increase in women in leadership vis-à-vis the second quarter of 2024. In occupational health and safety, we have over 11 years with no fatalities at CSN Mineração. Despite the danger involved in our activity, we work at heights and much more. In environmental management, a reduction of 11% in greenhouse gas emissions in terms of iron ore produced. With this, we would like to conclude the presentation for the second quarter.
Next to me I have Carlos Melo, the Superintendent Director of CSN Mineração, and I turn the floor over to Benjamin Steinbruch, the Chairman of the Board and CEO, for his considerations before the question and answer session. Good afternoon, everybody. Thank you for attending the CSN Mineração earnings call. As part of what was presented by Pedro, I would like to emphasize three points. The results of this second quarter: positive results for the quarter. Basically, we have our production, the increase in production, the cost that is quite competitive, and the investments that are being made in the mining operation, especially the P15 expansion project.
We believe that while we are very insistent on this point of having a higher production, lower cost, higher shipments at the port, the investments that have been scheduled are still underway for P15 and peripherals, which basically mean that we’re using the tailings from our dams. We’re very satisfied with the performance of the second quarter. We had the penalty in terms of the iron ore cost. Unfortunately, this is not under our control. It’s something that emanates from the market, and it refers to the plots and the appreciation of the real, which went against our availabilities. However, the quarter was within what we had foreseen, and the continuity of this positive operational management, with a cost reduction and a beginning of our secondary projects. The recovery of tailings, for example, are an additional motivation for the second half of the year.
In the case of flat, our idea is that it remain between $101. It should fluctuate within that range. We’re awaiting a message from China that should have made a manifestation this week regarding their plan on higher investments in infrastructure. However, nothing has been announced so far. As we all know, the iron ore price depends a great deal on the performance of the Chinese economy. I would like to thank all of our workers who are working arduously. We have motivated them considerably, challenging them to obtain cost reductions and production enhancements. Of course, a satisfactory flow of investment. We have concluded the hiring of civil construction for the P15 expansion project. We’re on schedule and we will still have to do more because the challenges are enormous.
In the present day, confusion that we see in the economy of China will only help us have a clear definition. We have to live with this lack of stability. We are sure that we’re doing what we can. We’re producing well. We’re producing at a low cost. We’re very attentive to the prices in the iron ore market. If we end up being lucky in terms of price, and price means a great deal for us, each dollar per ton can make a significant difference in terms of our results. We count upon a price improvement. Nothing beyond what is normal, but within that margin of $100 to $110. This will enable us to harvest the results because of price. We’re doing what has to be done. We’re on the right path and we would like to thank all of our employees working at CSN Mineração S.A.
and we will continue going forward. This quarter was better than the first quarter where we reversed our losses. The third quarter will be better than the second quarter. Let’s go on to the question and answer. We are at your entire disposal. Thank you. We will now begin the question and answer session for investors and market analysts. Should you have a question, please click on the raise hand icon or send your question through the Q&A icon. The first question is from Rafael Barcelos from Bradesco BBI. You can continue with your question. Rafael, good afternoon and thank you for taking my question. My first question is a strategic one for Benjamin Steinbruch. I go back to his initial words.
I would like to hear from you your vision on options, the assets for the company and what you said about the market, which is your vision on the strategic positioning of assets in the midst of all of this uncertainty that we’re going through, a macro uncertainty. The second question is to Pedro Oliva. From the viewpoint of cost, which are the trends for the following quarters and which is your strategy for purchases from third parties? Thank you. Regarding the first part of your question, Rafael, I would say that the Casa de Pedra mine is a magician’s thing. When you pull something out, only good things come out. We have a billion-ton reserve of iron ore. We have high grade iron ore in the form of pellet feed with a very high content of iron ore.
As we’re working with the first P15, we will work with a second P15, a third P15 to fully exploit that iron ore that we have, of course quality. Of course, we will make the necessary investments to raise our production according to the results of the operation. We have a very low cost compared to all mining companies. We’re in the first quarter worldwide. In terms of Brazil, even more so. We’re extremely competitive. With this iron ore that has present and future demand, high grade iron ore, all of the projects will become feasible. We have to have order guidance in terms of the sequence of our investments so that we can continue to work based on the company results. For this, as you all know, we have the tailings recovery which is mandatory for us, and we are decommissioning the dams now.
The deeper we go, the more we find high grade iron ore. The one that is extracted initially at the beginning of mining, as a consequence, has greater quality and a higher iron content. This is not something that just happens. We have 100,000 tons to be extracted. We’re beginning to work on that, and this is part of a higher production with a very low cost, with a high grade product. We have enormous potential of increasing our production, and of course, everything will be done very judiciously. We will self-manage the need for resources, but with a great deal of comfort because we are aware of the quality we have, of the costs we have, and the amounts we have. It’s a challenge for us to have the highest production in the shortest amount of time, of course.
We truly believe that from the viewpoint of secondary investments, which are already being made in the recovery of dams and in the way that we’re seeking strategic partners to explore that peripheral potential we have at Casa de Pedra, and eventually for a second and third P15. We are on the right path, we’re on a good track, we’re doing the right thing. We’re highly motivated with the operation of Casa de Pedra, and we should refer to the port. Every quarter we ship more iron ore. It’s not just a matter of production. The shipment is also important. We’re performing very well. We have the expansion of the port to 45 million tons. Therefore, the mining strategy for Casa de Pedra will come about by itself. Casa de Pedra shows us several paths. We have to choose our alternatives. Truly it is a mine with fantastic potential.
We will make all the necessary investments to increase production. If this is well done, the mine will be managed by the results of the operation per se. I think it’s simple. What we have to do and the speed will depend on the business itself. The partnerships that we are seeking to anticipate investments in these peripheral operations and Casa de Pedra itself. Thank you for the questions. Rafael, to go into the second part of your question, the cost trend, as the Chairman of the Board has just said, we think that CMIN has a competitive edge and we’re going to keep this competitive edge. Of course there is pressure from inflation and we offset this increasing the production and efficiency of our resources. Regarding our purchase strategy, in the first half of the year we acquired 5.9 million tons.
We should maintain that level in the second half of the year. We have incremental gains here with a trading operation where we need to pay off our logistic assets that are at the service of these volumes. We operate our assets at cost price, but we have significant investments allocated to the port. In the railroad, we have long term contracts and obligations with the clients for their services rendered at the port. We have a competitive cost, but we need to pay off the capital that has been invested. We try to have minimum margins in the purchases, not only to have higher volumes. We want to add value for our shareholders. Thank you. Thank you very much. Our next question comes from Ilhe Lippit from XP. You may proceed with your question. Good afternoon, Pedro, Benjamin. Thank you for taking our question.
My first question is about the prepayment of iron ore contracts. I would like to better understand if you think there is room to increase your exposure and if you could comment on the volumes that you have closed and the deadlines of terms looking forward. My second question refers to capital allocation. How are you going to balance that mix between CapEx, the payback of dividends, payouts going forward from the viewpoint of deleveraging the holding and a potential slowdown of business in the domestic market in Brazil. These are my two questions. Thank you for the questions, Guillermi. Regarding the prepayments, last year we ended with R$11.6 billion open. Regarding payments, if you look at the close, we’re standing at R$11.5 billion, showing you the execution we had communicated to the market, rolling out the amounts due expected for every year.
Now this year, in the first half of the year, we had the maturity of $15 million. At the end of the semester, we made an operation of $240.9 million. This concept of rolling out our exposure is our solution. There is room to increase this, but we don’t intend to do this now. Regarding volumes and deadlines termed this year, we have 13.1 million tons in prepayment in 2023, 14.7 and 13.3 million tons for 2027, and 9.9 for 2028. After this, it will drop to 3.9 million tons. There is a concept to roll over that maturity every year when it comes to capital allocation. CapEx, dividend payout, and buybacks. We have a buyback program open until 100 million shares that mature in December of this year. We have already bought back 53 million of this amount approved by our board.
In the recent past, we haven’t been very active in working with this open buyback. We have prioritized CapEx allocation and the payout of dividends. Of course, we’re always attentive to this alternative of the buyback. Regarding the CapEx, the plan that we communicated at the last CSN Day is maintained. The Chairman of the Board mentioned that all of this depends on the P15 expansion project, and the expansion to have higher volumes also depends on interesting opportunities in the reutilization of dam tailings, circular economy to produce at a competitive price with good financial returns, and with that social environmental look that is very well received by the communities that do want the advance of characterization of dam.
Now, given that net cash position that we mentioned in the presentation, we have 0.8 times leverage at present, which gives us the comfort of maintaining our payout of dividends, 100% of net profit, and alongside this, execute this growth plan that we have mentioned here. It’s an efficient, profitable operation with a sound balance that allows us to continue working this way. It’s very difficult to see a player paying out dividends and having growth. It’s usually one thing or the other. The market, CSN Mineração S.A., is an exception for the reasons I have just mentioned. In the holdings there are public plans regarding transactions that would involve our infrastructure assets among other alternatives. There are very clear alternatives that are being addressed by the marketing team of CSN. Thank you. Thank you very much, Pedro.
To complement this, Pedro, today we presented the earnings result of CSN Mineração S.A. and we were asked about the deleveraging not only for CSN Mineração S.A. but also for the holdings. I would like to repeat what we said in the call. We’re working arduously on the infrastructure package and the logistics package. We have seven assets, five in the Southeast, two in the Northeast, which are the Trans Nordestina FTL and the port. Our idea is to capture R$8 billion for the project in the Southeast that is more advanced in terms of its valuation and our desire and search for a strategic partner or another way of attracting partners, be it in the market or for the Northeast as well. They’re packages with similar values. We don’t know if we’re going to monetize them jointly or separately.
First, we will begin with the Southeast that is operating at full steam. Secondly, the Northeast, that is very close to conclusion. We are working arduously on this project for infrastructure and logistics. Along with this, we have several other alternatives that are under study. Our greatest priority, of course, is the deleveraging of the company. This was mentioned in the CSN Mineração S.A. earnings call this morning. As part of all of the assets, we have high quality assets. The one that is most advanced with a higher value is the infrastructure and logistics package. We’re selecting our advisors to continue with this until the end of the year, working towards this. That was very clear. Thank you. Our next question comes from UBS from Artur. You can proceed with your question. Good afternoon. I have two questions here.
My first, about the commercial strategy and your iron ore strategy. You said that you’re selling low grade iron ore until the coming into operation of the P15 expansion project. Now, this lower quality strategy was implemented because of what is happening in the Chinese steel plant. I would like to know how CSN Mineração S.A. has positioned itself to capture the premium as we have a scenario of growing spreads and more restrictive policies worldwide. My second question regarding cost. I would like to understand your next steps to maintain or deepen your cost advantage compared to other companies because of the projects of P15 and your recovery of tailings. Thank you for the questions, Arturo. Regarding our commercial strategy, this is something we mentioned this morning and I underscore it again. We will not have a relevant change of level in the quality discounts in the near future.
Of course, this is subject to market adjustments that have their own dynamic. We had an adjustment of $15.60 per ton in the first half of the year. For the second half of the year, the trend is to have an improvement, not very considerable. We will have minor adjustments in the third or fourth quarter. The low margins of the Chinese steel plant is a fact. It’s a market consensus. That means that they are seeking low grade more dynamically. There are enrichment plants in China with low utilization rates. This results in lower discounts for lower grade material. Looking forward, the coming into operation of P15 will be a transformation. If we look at the present day market conditions, the products would have a premium higher than $30 compared to plot 2.
We would leave that level of $15.60 per ton this quarter to $16.50 per ton with a premium of $30 per ton or more. The plant has been foreseen for the fourth quarter of 2027 with a ramp up of 12 months. Materially, this should allow us to enhance the quality and the premiums that CMIN will obtain. You asked about how we are capturing that premium with that quality. In general, those pet feedback contracts follow what is done with pellets. The negotiations are based on a benchmark defined every quarter in the contract. This will be the model that we will tend to follow in most of our contracts. Regarding the costs, we always have several initiatives. I’ll mention only one example that is underway. Displacement of dry operation we have in our production mix into Casa de Pedra.
This avoids more complicated displacements in 60 ton trucks of capacity. It ends up reducing the DMT. By reducing TMT you can produce more with the same resources that you have. This cost control and the increase in efficiency and productivity is one of the initiatives we have had throughout the years. Other initiatives include the development of movable posts within the mine to save on diesel. Increasing the volume of displacement. This eliminates lines and the time it takes to go to these service stations. Basically, we also have had an increase in fleets that have increased from 40 to 60 tons of feeds. If we look at the future, there are other opportunities that we are surveying. The automation of the fleet itself is something that has been ever more adopted in our sector and is a real possibility for Casa de Pedra.
When I speak about cost control, I’m not even thinking of more strategic movements for the near future. That was very clear. Thank you very much. Our next question comes from Eugenia Cavaliero from Morgan Stanley. You can proceed with your question, ma’am. Hello everybody. Good afternoon. My question refers to the CapEx disbursement for CMIN. Regarding the P15, when can we expect an increase in that CapEx? You mentioned it in the guidance in CSN Investor Day and you mentioned it in the last call. Will we have a pickup in those expenditures in the coming quarters? If you could give us an update in the progress of the construction of this project. Thank you. Eugenia, thank you for the question regarding the CapEx. I mentioned an exponential growth, if I recall well, a growth of 50% for the first quarter.
We’re forecasting something similar for the second and third quarter. In the fourth quarter, we will end up with more than R$500 million for expansion. CapEx we began with R$141 million, R$214 million. There is a ramp up which is of course desirable and directly associated to the positive advance of the works at P15. We had an important milestone in the supplies of P15 recently, a definition of the suppliers responsible for the civil work at the plant, and the next important hiring, Eugenia, are underway. We have several specifications. We have begun speaking to suppliers because of electromechanical assembly and route iron ore.
This should only take place at the beginning of 2026. We are going to be taking iron ore from the plant to filtering that is very close to the loading area, and we have the displacement of the tailings and the return of the water towards the plant. Thank you, Pedro. Thank you for the questions. Our next question comes from Yuri Pereira from Santander. You may proceed with a question. Thank you. Good afternoon. I want to go back to the first question on purchases from third parties to get an idea of the profitability of producers that supply this iron ore. Have you been able to make money with this? Is there anything you can share about this process? Yuri, that’s a very pertinent question. At the level of $100 or $110, yes, they do have healthy margins.
The Brazilian iron ore has a simpler grade than the Australian iron ore. In the present day market conditions, with the logistics available, RMS and the port, I would say that the margins are healthy. Of course, this will vary from one supplier to another. You have suppliers nowadays that do have a certain scale. They have projects for high content iron ore feed. They tend to be more competitive and they’re working with equipment that is smaller than the larger mining companies and an interesting price realization. This does not hold true for the entire sector. We have simpler producers with higher costs, with products that perhaps are poorer in quality and that are more sensitive to price. Presently this has not become a touchy point when it comes to the origination of volumes. It hasn’t been so far. It shouldn’t be going forward.
Now, with iron ore at $90, what will happen with that volume from third parties? When the market tested $90 iron ore, we see that the margin decreased, but the volumes did not leave the market. I don’t see players making decisions based on the prices of the spot market. The decisions are made for the long term. All of the players in our market had relevant results in the last few years with the iron ore. I think they have a good balance to withstand this price fluctuation in the coming years. If it comes close to $90, these products will not come out of the market. However, their margins are more compressed. Thank you. Thank you very much. Our next question comes from Marcelo Arazi, from BTG Pactual. You may proceed with a question. Hello everybody. I would like to see your market vision.
At the beginning of the call you said that the iron ore will be at $100, $110 per ton. Perhaps you can break on this vision you have, knowing that China has data of a falling consumption of steel and, well, the volumes have changed. I would like to know your vision regarding this market. You commented on China at the beginning, saying that there has been no relevant message in the last meeting of the Chinese government. What do you foresee in terms of this potential side reform being debated by the market? How could this impact the iron ore cost? Thank you for the question, Marcelo. There are some data. We have solid foundations in our sector. The use of blast furnaces in China. We spoke about this in the morning. Their use is 90.2% higher than it was a year ago. Their inventories have dropped.
They’re at the lowest level in the port since February of 2024, 136.6 million tons, 16 million tons below what they were a year ago. Despite the margin being low, that favors the low grade iron ore. For some time already, there hasn’t been such a large number of profitable Chinese steel operations. 16.5%. Last year there were 15% of steel plants with a positive margin. That statistic has increased fourfold. When we look at their inventories, the steel are 5 million tons below what they were a year ago. There’s a curious information here. The retail sales of home appliances are 30% what they were in the first quarter of last year. If you look, the consumption of steel is not that relevant. They consume what Brazil consumes in terms of fuel for their home appliances. They had an expressive growth.
This shows the success of the program that they implemented, called training, an incentive for the population. Now, sales at the plant have not grown that much. 9% for air conditioning, 8% for washing machines. There was a lack of product in the retail market. There is an involution. When you have an involution, what is happening in the market is that inefficient competition, an excess of capacity and a price war. This shows that potential side reform that you mentioned. This is not only for steel, but for cement, the production of cars and much more. All of this could lead to healthier margins in sectors that consume steel. All of this will strengthen the demand for steel. You have the construction of the largest hydroelectric in the world. The steel consumption is not material. They estimate 200 to 600 million tons per year.
Not relevant for the Chinese market. Perhaps it’s just one more indicator that the large infrastructure projects will continue to be part of the Chinese development. They do consume a great deal of cement and steel. If we look at the iron ore supply between January and June, it’s 3 million tons below what we had in 2024. The demand for steel is healthy for the Chinese now. The supply of iron ore shows a greater retraction in the market vis a vis last year. It’s not the case of price Brazil that is growing by 100,000 tons. We had an event of force majeure in Peru. What is happening in Ukraine? They’re all holding back on their supply. All of this is relevant. There is no natural depletion in the sector. Capital allocation has to exist to offset what is leading the market.
They won’t go in with 100,000 tons overnight. This is the level they will reach in 2030. They have a relevant reserve the coming year. They’re speaking of 20 million tons now. If we speak about P15, it’s 16.5 million tons. If 20 million tons is relevant, yes, but it won’t happen overnight. It won’t be immediate. This will happen throughout a certain number of years. You have the natural depletion, of course, that continues to exist. Thank you. Thank you very much. A highly detailed answer. Thank you. Our next question comes from Ricardo Monegaglia from Safra. You can proceed with a question. Good afternoon. Thank you for taking my question. The first question, Pedro, refers to volume in production and third-party purchases. In my account, the volume of third-party purchases was stable in the first half of the year.
This leads me to think that your own production has attained higher levels. I don’t know if this time, but could we have a discussion if the guidance of this year for production and C1 should be updated? What you developed in the first half, if it will be the same of what you develop in the second half of the year, will be above the guidance. Perhaps you should review this and if it is the case, which are the facts that made your internal production grow so much year on year. Thank you for the questions, Ricardo. Regarding the production volume and purchases of 42 to 43.5 from third parties, we produce 20.8 million tons. If we were to double that volume in the second half, we would be somewhat above the range of our guidance.
That excellent performance of the first half of the year allows us to be in a comfortable position to comply with the guidance we disclose to the market we’re in the half of the year. Of course, we will review this. We have operational difficulties with the coming into operation of P15. We’re confident that we will deliver our guidance. Eventual discussions of a review will only take place after the end of the third quarter. Regarding our own production and the factors, our own production has grown, but the amount purchased from third parties has also grown. It was 19.5 in the first half of 2024. We now have 20.4. There is a growth in own production and purchase from third parties. The trend is to maintain that strong volume of own production and purchases in the second half of the year. What allowed for this better position?
An excellent performance of our system. When I spoke about cost reduction, one of our sieves in Casa de Pedra, this is one of the initiatives we were able to implement in the first half with positive results. Thank you, Pedro. If you allow me another question. The expectation for quality, which is the evolution we can expect for the coming Q2/Q4 vis-à-vis your delivery levels in the first half of the year, we shouldn’t have significant variations in the quality levels until the coming into operation of the P15 expansion project. We do hope to have a marginal enhancement with a positive twist in terms of quality, with a higher iron ore content and lower silica content, which will support our price realization. If we take a picture today with a higher Platts level, remember that at the end of the quarter we had 6.8 million tons.
At the Platts of June, that was at $94. Now with the Platts above that level of $100, where we hope it will remain for a short period of time, it means we will have a better mark to market, a positive impact. The exchange rate that has appreciated also plays in our favor. It will be 59% ore content or around that. Thank you. Thank you very much, Pedro. Our next question is in writing for Carlos Rodriguez, an investor. Is there the possibility for CMIN to close its capital? Thank you, Carlos. Thank you for the question. Nowadays we don’t discuss that possibility in house. The movement and the company are part of a broader strategy of our Chairman and CEO for the group, Mr. Benjamin Steinbruch.
In truth, we’re attempting to strengthen each of the business units, allow for these businesses to have their own currency of exchange, to become more consolidated, to become listed in the stock market. We may be listing other businesses, but we won’t be closing the capital of CMIN. Our next question is in writing from Daniel Lindodo, investor. Congratulations to the results for the quarter. I have two questions. In the scenario that we see presently a depreciation of quality of iron ore, if there’s a premium paid for better quality as happened in 2018, can CMIN still work with a product mix as it did in 2018? Can you comment on your freight strategy? Thank you for the questions regarding quality. We have our levers. We can change our commercial strategy. In the past, a not distant past, different players adopted the strategy of value over volume.
This trade-off will always be on the table and they may focus on different fronts. CSN Mineração S.A. will always have those trade-offs to analyze and optimize its strategy depending on the market conditions. Now, regarding freight, we did have a strategy of closing higher volumes than we historically had for the second half of the year. We have a volume of 7.1 million tons already contracted with an average price of $21 per ton. Quite competitive if you look at C3 presently. The company has adopted that strategy of closing annual contracts, different contracts that will total this volume. We have been paying attention to that cost item line as a business opportunity and the opportunity to enhance the management of that variable. It is the main variable presently when we look at the cost that exists in China, $20.8 and a C3 of $40-some dollars.
It costs more to take it from our port to China than to produce the port and produce it at home and operate our own port. This has gained significant traction in house and with the long-term prices and with the market levels. It doesn’t make sense to have these contracts for the very long term. That is why they are yearly contracts. Without a doubt we will make the most of the market opportunities on that front. The question and answer session ends here. We’re going to return the floor to Mr. Pedro Oliva, the CFO, for the closing remarks. I would like to thank all of you once again for your attendance at our earnings call. I would also like to thank each and every one of the employees at CSN Mineração S.A. this quarter.
Once again they helped us to reach that new record in volume, in production, and in sales volume for the second quarter. I share this result for each and every one of you. Good afternoon and have a very good weekend. The conference call for CSN Mineração S.A. ends here. Have a very good day.
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