Sunday, 30Oct,2011
Dow Jones reported that Brazilian mining company Vale SA prepared to compete on the iron ore spot market rather than sell ore on contracts if that's what clients want.
Mr Jose Carlos Martins Vale executive strategies director said however we can't work with a system whereby if iron ore prices fall they want spot prices and if they go up they want fixed contract prices.
He said that "We've got no dogma at Vale on this. We're not high cost producers. We're prepared to compete at spot market prices."
Mr Martins said spot market prices plunged mainly due to credit restrictions in China which are making it more difficult for steelmakers and traders to purchase iron ore supplies.
He said that “Vale is negotiating on an individual basis with its clients to ascertain what kind of pricing system they prefer following recent market turbulence. The Chinese steelmakers are quite aggressively showing their preference for a system nearer the spot price while the Europeans and Japanese tend to prefer contracts which may give greater stability.”
He added that "Our tendency is to accompany market movements. We're going to accept what our customers decide."
Mr Martins said "The Chinese prefer a price nearer the market situation. The market is trending more to spot market prices in what is an almost irreversible move and a return to the annual benchmark system is now completely out of the question."
He said that however Vale isn't prepared to give discounts to customers if they change to a spot-price basis. He said that "It's not a free ride, if customers want spot prices and they must guarantee they will take the volumes already agreed."
He added that "Quarterly contracts are meanwhile bearable for both sides."
Iron ore producers and steelmaking customers worldwide agreed to adopt a quarterly contract pricing system for iron ore in April 2010 after the 40 year old annual benchmark pricing system fell apart during the global economic crisis due to Chinese pressure for cheaper prices near spot market prices.
Sourced from Dow Jones
Dow Jones reported that Brazilian mining company Vale SA prepared to compete on the iron ore spot market rather than sell ore on contracts if that's what clients want.
Mr Jose Carlos Martins Vale executive strategies director said however we can't work with a system whereby if iron ore prices fall they want spot prices and if they go up they want fixed contract prices.
He said that "We've got no dogma at Vale on this. We're not high cost producers. We're prepared to compete at spot market prices."
Mr Martins said spot market prices plunged mainly due to credit restrictions in China which are making it more difficult for steelmakers and traders to purchase iron ore supplies.
He said that “Vale is negotiating on an individual basis with its clients to ascertain what kind of pricing system they prefer following recent market turbulence. The Chinese steelmakers are quite aggressively showing their preference for a system nearer the spot price while the Europeans and Japanese tend to prefer contracts which may give greater stability.”
He added that "Our tendency is to accompany market movements. We're going to accept what our customers decide."
Mr Martins said "The Chinese prefer a price nearer the market situation. The market is trending more to spot market prices in what is an almost irreversible move and a return to the annual benchmark system is now completely out of the question."
He said that however Vale isn't prepared to give discounts to customers if they change to a spot-price basis. He said that "It's not a free ride, if customers want spot prices and they must guarantee they will take the volumes already agreed."
He added that "Quarterly contracts are meanwhile bearable for both sides."
Iron ore producers and steelmaking customers worldwide agreed to adopt a quarterly contract pricing system for iron ore in April 2010 after the 40 year old annual benchmark pricing system fell apart during the global economic crisis due to Chinese pressure for cheaper prices near spot market prices.
Sourced from Dow Jones
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