More speculation on Thursday that the benchmark iron ore price may rise by much more than the 30 per cent that has been mooted this far. Vale SA, the world’s largest iron ore miner, has suggested that the benchmark price will have to reflect soaring spot prices as Chinese demand for its iron ore has increased greatly.
Vale’s Ferrous Minerals Director Jose Carlos Martins told analysts on Thursday that it expects “a new price reality” from its customers. “If our customers want to stick to benchmark prices, they will have to accept something close to the level of spot prices.”
Mr Martins’ comments have led analysts to predict that the benchmark price may be as high as 40 to 50 per cent more than at present. Earlier this week Australian analysts Goldman Sachs JBWere predicted a rise of as much as 90 per cent following comments by BHP Billiton that current spot prices were that much more than contract prices.
Mr Martins said that iron ore is trading for about $130 a metric ton on the Chinese spot market whereas Vale’s average price last year was $55.99.
Meanwhile, Vale also said late yesterday in a regulatory filing that fourth-quarter net income increased 11 percent to $1.52 billion, or 28 cents a share, from $1.37 billion, or 26 cents, in the year-earlier period results which disappointed analysts who, on average, expected profits of around 31 cents a share.
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