Vale sees stable 2009 iron ore exports to China

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(Agencies)
Updated: 2009-03-17 11:03

Brazilian miner Vale's iron ore exports to China should hold steady for the rest of the year, Chief Executive Roger Agnelli said Monday.

The CEO of the world's largest iron ore miner said some small- and medium-sized Chinese steel mills had begun producing again and buying iron ore.

But large steel mills were not yet buying, he said.

"So, my perception is that the level that we are running today, the level of activity that we have today, the volume that we are exporting to China today, will stay stable until the end of the year," Agnelli said on the sidelines of a conference on Brazil.

Vale announced in mid-February that it expected to ship a record 30 million tons of iron ore to China in the first quarter of 2009.

The mining giant has been adding new customers among steel producers in China and Agnelli said he expects that trend to continue.

"We have signed a lot of contracts with small and medium-sized Chinese mills. I am positive about China. I'm really positive. I think they are adjusting their growth rate. But they are still in a growth scenario," he said.

Also in February, Jose Carlos Martins, director of ferrous metals at Vale, said new clients in China had signed contractual supply agreements with Vale to purchase 50 million tons annually.

On Monday, Agnelli explained that Chinese mills had bought a lot of iron ore in the beginning of 2008 thinking the market would continue growing at a fast pace. Spot iron ore prices peaked around that time.

By September, however, demand from China had completely stopped. Since then, Chinese mills have been working off stockpiles, which, he said, led to the latest pick up in iron ore purchases.

For 2009, he said, "I think China will face a slight decrease in production over the year compared with 2008".

Vale is currently negotiating with Chinese steel producers over annual iron ore contract terms. Last fall, many analysts expected the contracts would settle with huge price declines after the steel sector annnounced sharp production cuts.

The recent resumption of iron ore sales to Chinese steel mills caused many observers to reduce their projected price drops for the iron ore contracts.

Agnelli would not be drawn when asked where he thought term contracts would settle.

"We are still talking. We are discussing. Let's be patient." he said.

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