Rodolfo De Angele

Rodolfo Angeli asked about the pulp market dynamics in China, specifically regarding any changes in the trend of increased domestic production and potential risks to the 6 million tons distance presented at the investor day. He also inquired about the future CAPEX trends, particularly for 2027, and the potential for a reduction over time.

Answer

Leonardo Grimaldi, Executive Officer of Commercial Pulp, People & Management, explained that in 2025, roughly 2 million tons of new pulp capacity in China had a net zero effect due to lower operating rates and other factors, leading to positive hardwood import growth. For 2026, 2.8-3 million tons of new capacity are mapped, but most projects start in Q3/Q4, suggesting stronger short-term hardwood fundamentals. Marcos Moreno Chagas Assumpção, Director of Investor Relations, noted that while there are many CAPEX variables, non-recurring items in 2026 (SAP upgrade, Pangea Deal payment, Cerrado bonus, industrial project spillover) suggest room for lower CAPEX later, though no specific guidance was provided.

Rodolfo Angeli from JPMorgan Chase & Co. inquired about the pulp market dynamics in China, specifically the strength of paper demand, trends in Chinese pulp production, and any risks to the previously mentioned 6 million tons capacity/demand gap. He also asked about Suzano's CAPEX trends beyond 2026, particularly into 2027, and the potential for a long-term reduction in CAPEX.

Answer

Leonardo Grimaldi, Executive Officer of Commercial Pulp, People & Management, explained that 2025 saw a net-zero effect from Chinese verticalization due to lower operating rates and fiber swaps, leading to strong hardwood pulp imports. For 2026, he noted 2.8-3 million tons of new capacity are expected, mostly in Q4, implying no significant short-term impact. Marcos Moreno Chagas Assumpção, Director of Investor Relations, detailed several non-recurring CAPEX items for 2026 (SAP upgrade, Parkia Deal payment, Cerrado bonus, industrial project spillover) which suggest room for lower CAPEX in future years, though no specific guidance was provided for 2027.

Rodolfo De Angele inquired about the CapEx outlook for 2026 in light of the Eldorado deal and the company's free cash flow narrative. He also asked CEO Beto Abreu for his strategic outlook after a year in the role.

Answer

EVP of Finance & IR, Marcos Moreno Chagas Assumpção, indicated that while the trend for CapEx should be downward, specific 2026 guidance will be given in December. CEO João Alberto Fernandez de Abreu stated that there is no time to relax, and the focus will remain on competitiveness, deleveraging, and executing existing projects like the Pine Bluff turnaround and the Kimberly-Clark JV integration, without adding new M&A initiatives.

Rodolfo De Angele asked about the current state of pulp price negotiations with clients amid high uncertainty and falling resale prices. He also inquired about Suzano's capital discipline, specifically how the company is thinking about higher required returns for new investments in comparison to deleveraging, dividends, and share buybacks.

Answer

Leonardo Grimaldi, an executive, explained that the market is in a 'price discovery mode' after the tariff war reset negotiations. He noted that current spot prices are unsustainable, as they are below the marginal producer's cash cost of $625/ton. Beto Abreu, an executive, stated that while the company's strategy is unchanged, any new investment now requires higher returns due to increased global risk. He mentioned analyzing roughly $3 billion in potential opportunities but emphasized that deleveraging remains a priority. Aires Galhardo, an executive, added that buybacks are a key alternative if suitable projects are not found.

Rodolfo De Angele asked for more details on cost-cutting opportunities in Brazil and inquired about the positive outlook for the United States, including potential strategies to capitalize on the strong market conditions there.

Answer

CFO Rafael Japur explained that Q2 costs in Brazil were impacted by temporary production disruptions at the Ouro Branco mill, and he expects fixed cost dilution to improve as production normalizes. CEO Gustavo Ferneki described the US market as being in its 'best moment,' driven by strong demand from solar, data centers, and reindustrialization. The strategy is to make precise, marginal capacity additions rather than large disruptive investments.

Rodolfo De Angele requested more details on the recently announced special steel greenfield project in Mexico, asking about the strategic rationale, potential investment size, and project economics.

Answer

CEO Gustavo Werneck detailed the rationale, citing significant investments from the automotive industry in Mexico and the country's current reliance on special steel imports. He confirmed it would be a greenfield project requiring specialized expertise. CFO Rafael Japur added that Mexico imports 70% of its special steel for auto parts and that Gerdau already serves this market from its U.S. and Brazil operations. He clarified that the final investment amount is still under study and the widely reported figure is a market reference, not a company number.

Rodolfo De Angele inquired about the sustainability of the significant cost reductions across all segments, asking what portion is structural, and sought clarity on the specific conditions required for Vale to initiate a more aggressive share buyback program.

Answer

Marcelo Bacci, Executive VP of Finance & Investor Relations, expressed high confidence in meeting full-year cost guidance due to stable operations. Regarding shareholder returns, he stated that additional buybacks or dividends in the second half are contingent on cash flow performance and the company's expanded net debt moving towards the midpoint of its $10-20 billion target range, acknowledging a 'mismatch' between operational performance and the stock's valuation.

Rodolfo De Angele questioned the strategy for the nickel business, which generates low EBITDA despite high CapEx. He also asked about Vale's commercial strategy to counter the future supply of high-quality ore from the Simandou project, noting a potential timing gap before decarbonization fully drives briquette demand.

Answer

Executive Shaun Usmar detailed the nickel turnaround plan, including overhead reductions, ramp-ups at Onça Puma and Voisey's Bay, and a strategic review of the Thompson asset to improve profitability. Executive Rogério Nogueira addressed the Simandou concern, stating that natural market depletion and the project's own blended ore strategy will mitigate the impact of new high-grade supply, while Vale's portfolio flexibility will allow it to adapt.

Rodolfo De Angele of JPMorgan Chase & Co. asked about the structural initiatives driving cost reduction beyond seasonal volume effects and questioned how iron ore prices below $100/ton might affect Vale's volume and commercial strategy.

Answer

Executive Gustavo Duarte Pimenta highlighted structural cost initiatives like new technologies and improved maintenance processes that are already showing results. Executive Marcello Spinelli noted that the market is currently balanced, with port inventories not being a direct proxy for demand, and that China's 'new normal' supported by manufacturing provides stability for 2024 and 2025.

Rodolfo De Angele requested more details on cost-cutting initiatives and their potential financial impact, and asked if lower oil prices might lead to reduced CapEx and extraordinary dividends.

Answer

Fernando Melgarejo, Executive Director of Finance and Investor Relations, outlined plans to optimize spending, simplify projects, and prioritize investments with faster returns, stating cost reduction is the focus before any CapEx cuts. Sylvia dos Anjos, Executive Director of Exploration and Production, added that they are targeting higher operational efficiency offshore and significant cost reductions in onshore fields to boost profitability.

Rodolfo De Angele asked for insight into the board's decision-making process that led to the reversal on paying extraordinary dividends. He also inquired about the expected production depletion rates for pre-salt and post-salt fields, given the new high-capacity FPSOs coming online.

Answer

CFO Sergio Leite described the dividend decision as a demonstration of strong governance, where the board sought more information on the volatile external scenario before approving the payout, with the remainder to be reassessed by year-end. Exploration Director Joelson Mendes explained that the natural decline rate is around 10% annually and is expected to remain stable despite new, efficient FPSOs due to their design for rapid recovery.

Rodolfo De Angele from JPMorgan Chase & Co. asked about the sourcing of gas at Ultragaz, questioning if the impact from auctions is a one-off or recurring effect. He also inquired about the working capital trends at Ipiranga, particularly how the company might offset recent capital consumption.

Answer

An executive identified as Julius stated that Ultragaz sourcing from auctions is stabilizing and expected to represent 5-10% of total supply, making it a recurring factor. CEO Rodrigo de Almeida Pizzinatto addressed Ipiranga's working capital, attributing the Q1 cash consumption to inventory buildup for the new tax rules, changes in supplier terms, and higher product costs, but noted an expected recovery in the second quarter.

Rodolfo De Angele asked about Ipiranga's forward-looking strategic agenda beyond current operational improvements. He also inquired about the business environment and margin outlook for Ultragaz for the second half of the year and into the next.

Answer

Executive Leonardo Linden detailed Ipiranga's ongoing priorities, including logistics optimization, maintaining competitiveness, brand engagement, and a long-term IT transformation project. Executive Tabajara Costa explained that Ultragaz's Q2 margin was affected by competition and mild weather but the focus remains on operational excellence and improving its reseller network.

Rodolfo De Angele asked for an updated view on long-term peak production, given the pre-acquisition target of 150,000 barrels per day by 2030.

Answer

Miguel Galuccio, Chairman and CEO, stated that the acquisition accelerates their ambitions and the new strategic objective will aim for a new height 'about 150,000 barrel per day,' suggesting the previous target will be surpassed or achieved sooner. He announced a forthcoming Investor Day in the second half of the year to present the new long-term plan.