Vale SA, the world’s biggest exporter of iron ore said that demand growth for the steelmaking ingredient may resume at the end of the year after the Chinese government tackled overcapacity in its steel industry.
Mr Jose Carlos Martins executive director of sales, marketing and strategy told reporters in Dalian that “Demand is good. We see this stable market for two to three months, until we grow again. We need to prepare for the growth from the end of this year, beginning of next year.”
Mr Martins said that “We have no impact from these measures. The measures that the Chinese government is taking to control energy consumption and carbon emission already affected production, but the impact was not that big.”
Mr Martins said that “Customers are fulfilling their contracts. It seems the price is good because otherwise the customers would go to spot.” Vale doesn’t expect “big changes” to the way iron ore is priced.”
The Chinese government limited power supply to steelmakers and asked companies to shut obsolete plants this month, trimming output in the world’s biggest producer, to meet energy targets and curb overcapacity. China’s iron ore imports fell the most in seven months in August.
Contract iron ore prices will drop 13% for the three months starting October, the first decline in three quarters on slowing Chinese demand. Spot prices have dropped 6% since August 17.
Vale SA, Rio Tinto Group and BHP Billiton Ltd the three biggest exporters of iron ore, this year abandoned a 40 year custom of setting prices annually in favor of quarterly contracts.