China’s National Business Daily is quoting a steel producer in China’s Hebei province as saying that Brazilian miner, Vale, the world’s largest iron ore miner, has quit the annual iron ore benchmark talks currently taking place between the large iron ore miners and China’s leading steel companies.
Vale have refused to comment.
As previously reported, Vale want to move away from an annual contract price to the spot price. However, spot prices are 80 per cent higher than last years’ contract price, and China’s steel mills have suggested that they will find a contract price rise of 40 to 50 per cent unpalatable amid suggestions that their profit margins have already been eroded. The price difference between the two parties may well explain Vale’s refusal to negotiate
Meanwhile, reports from Japan suggest that leading Japanese steelmaker, JFE Steel, are ready to accept a 90 per cent rise in their iron ore contract price. Vale have offered the new price for the April to June quarter and the Nikkei Daily reports that JFE are ready to accept. The company recently accepted a 55 per cent increase in the price it pays coal miner BHP Billiton for its coking coal.
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