Brazilian mining and metals giant Vale said on Friday its price talks with China will not affect iron ore exports to that nation, after the company unexpectedly decided to renegotiate its contracts with Asian clients.
“If iron ore shipments to China should stop, China’s steel industry would come to a standstill,” Vale president Roger Agnelli told reporters seeking his comments on rumors that China had decided to cancel iron ore imports from Brazil.
Agnelli said there was no problem with his company’s trade with China and that iron ore exports to the Asian giant were continuing as normal.
The world’s top iron ore producer, Vale mostly exports the mineral to China and sets its price annually, through negotiations at the start of the year.
However, Vale on Sept. 9 broke tradition by announcing it was “renegotiating the price of iron ore with our Asian clients to bring it in line with our European clients, due to the drop in shipping costs.”
Agnelli said Vale’s iron ore prices for Asian clients were 11.5 percent lower than Europe’s.
“It’s an issue that’s going to be negotiated, but in reality the Chinese will not see a rise [in prices]. The lower shipping costs between Brazil and China will offset the higher price of iron,” Agnelli said.
“The Chinese are complaining, but the final price will be the same,” he said, adding that Vale’s production facilities were operating at full capacity and he saw no signs demand was dropping.
Meanwhile, China Steel Corp (中鋼), Taiwan’s largest maker of the metal, will continue to operate its mills at 100 percent of capacity to meet strong local demand, vice president Kao Tong-seng (高東生) said.
The steelmaker won’t cut output and will support mills that rejected Vale’s demand for the raw material iron ore, Kao said in Shanghai yesterday.
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