BRAZILIAN miner Vale has offered freight discounts for iron ore shipments to Chinese steel mills, according to an executive with a Chinese steel trading house and consultancy and a China Daily report.
Vale has offered to fix freight charges for Chinese mills at $US25 ($27.87) a tonne for a two-year contract, or $US24/tonne for a four-year contract, said the executive, who has close ties to both the mining and steelmaking industries.
If the offer has actually been made, Vale is seeking to eliminate a key advantage enjoyed by its Anglo-Australian rivals Rio Tinto and BHP Billiton that has given rise in the past to differing price settlements for Brazilian and Australian benchmark iron ore. Chinese buyers paid more for Australian ore in the 2008 contract because Australian miners argued that their lower shipping costs, compared with Brazilian freight, justified a premium for Australian ore. The executive said he didn't know whether any Chinese mills had signed, but the China Daily report that "some Chinese companies are believed to have signed".
Source: The Australian
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