Brazil's Vale Reaches Iron Ore Price Deal With Posco, Nippon Steel
June 10 2009 - 8:24AM
Dow Jones News
Brazilian mining giant Vale S.A. (VALE) said Wednesday that it
had reached an agreement on 2009 iron ore price contracts with
several Asian steelmakers.
Vale closed its first 2009 iron ore price contracts with South
Korea's Posco (005490.SE) and Japanese steelmaker Nippon Steel
Corp. (5401.TO), the miner said. The agreement also covers Japanese
companies Nisshin Steel Co. (5407.TO), Kobe Steel Ltd. (5406.TO)
and Sumitomo Metal Industries Ltd. (5405.TO).
Prices for iron ore fines will decline 28.2% from the 2008
reference price, with lump iron ore prices sliding 44.47%, Vale
said. Iron pellet prices, much prized for their efficient use in
blast furnaces, will decrease 48.3% from the 2008 contract
price.
The fall in 2009 iron ore prices followed a steep drop-off in
iron ore demand amid the global economic slowdown and financial
crisis. Vale waited on the sidelines this year, opting to allow
rivals BHP Billiton Ltd. (BHP) and Rio Tinto PLC (RTP) to set
market prices in 2009.
Last year, Vale reached an early deal with Asian steelmakers,
only to see those prices topped by ore from Australia when rival
miners were able to wrangle a proximity premium.
Last year, Vale's iron ore fines from its Southern System mines
rose 65%, while higher-quality ore from the massive Carajas mining
complex increased by about 71%. Vale is the world's largest
producer and exporter of iron ore and iron blast furnace
pellets.
However, notable by its absence Wednesday was an agreement with
Chinese steelmakers, who are again being led in price negotiations
this year by Shanghai Baoshan Iron & Steel Co. (600019.SH), or
Baosteel.
Chinese steelmakers have so far held out for a steeper price cut
in 2009.
-By Jeff Fick, Dow Jones Newswires; 55-21-2586-6085;
jeff.fick@dowjones.com