2019 saw Brazil’s production volumes falling by nearly 13% in the aftermath of Vale’s Brumadinho dam failure. Despite that, the world's lowest cost exporting country saw its cash margins expanding by 13% last year as a result of higher iron ore prices. In 2020, we expect production and margins to once more trend in opposite directions. While margins are set to contract on the back of lower iron ore prices, output from Brazil is poised to grow thanks to higher output from Vale's flagship project, S11D. Despite lower iron ore prices, a 25% drop in costs is set to shield Brazilian producers' margins from a sharp fall this year. Lower costs will come as a result of historic-low oil prices and an even depreciated Brazilian real. Healthy margins and an increasing seaborne demand for Brazil’s products have emboldened suppliers in the country to invest in growth capex. Vale's S11D and CSN’s expansions are two of the most important projects driving capital expenditure at the moment.