Vale SA, the world’s largest iron-ore producer, is operating at maximum capacity as sales worldwide rebound after the crisis and are expected to grow further next year, the company’s chief executive officer said.
“It’s going to grow,” Chief Executive Officer Roger Agnelli said today in an interview with Bloomberg Television in London when asked about Chinese iron-ore demand next year. “That’s for sure. Demand in Brazil is also going to grow.”
Rio de Janeiro-based Vale is restarting iron-ore plants, including higher-cost mines, idled during the economic contraction, and boosting output to meet higher demand from China, Europe, Japan and Brazil. Third-quarter ore shipments climbed 36 percent from the previous quarter, while average prices increased about 20 percent, the company said Oct. 28.
Vale Chief Financial Officer Fabio Barbosa said Oct. 29 the company could “soon” boost iron-ore output to full capacity of about 310 million metric tons a year. In 2008 Vale produced 301.6 million tons. Vale said on Oct. 21 it plans to increase output to 450 million tons by 2014 with the start-up of a new mine to produce high-grade Carajas ore in northern Brazil.
“The reality is we can count on China continuing to grow, Latin America is going to grow and India is growing,” Agnelli said today. Recovery in the U.S. will take longer, he said.
Agnelli said 2010 will be a “very nice year” for commodities, because of strong demand in Asia. Chinese iron-ore imports climbed 30 percent in September to a record 64.55 million tons, as third-quarter GDP growth reached 8.9 percent, according to government statistics.
Vale’s iron-ore shipments rose to 73 million tons in the third quarter, from 53.8 million in the prior period. Third- quarter shipments to China reached a record 39.8 million tons, Vale said on Oct. 28.
Rising imports in China are an “irreversible” trend because of high local production costs, Barbosa told analysts Oct. 29 in a conference call.
Agnelli said he expects iron-ore price negotiations with China to be “tense.” More time is needed to see a clear price trend, he said.
“I think this year it’s going to be less tense, but tense,” he said. “They are tough negotiators. We have to be patient, it will be a little bit different from last year.”
Chinese steelmakers, which didn’t settle contract prices with iron-ore suppliers and who are buying on the spot market, are now seeking a new “united” price system for 2010, involving elements of both spot and contract prices, the People’s Daily Online reported Oct. 27.
Iron-ore prices in the spot market for delivery to China have risen 15 percent since the beginning of September, and are now higher than average annual contract prices, according to specialist London-based publication Metal Bulletin.
Source: Bloomberg
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