A report from the US news agency, Platts, reports that the Brazilian iron ore miner Vale, the staunchest supporter of annual pricing of iron ore, has admitted that an eventual migration to a spot- or index-based pricing system, is out its hands and that it would have to follow the direction taken by the market
Mr Fidel Blanco, the company's iron ore sales MD, said that “If one decision prevails, we will have to follow. We might regret it, but we will do it.”
He added that “The decision lay in the hands of buyers. Vale is a supporter of the benchmark system. This has been quite harmonic until now, and we are not sure that the steel industry wants a commoditization of iron ore.”
Mr Blanco said that “Pricing based on the spot market had become attractive this year because of the difference with contract rates. Pricing based off indices was dangerous because indices were not representative of the market. They are based on reported sales of Indian iron ore by traders into a couple of Chinese ports. Is this reliable enough? Does it represent the market situation? We don't think so.”
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