Vale provisionally gives 20% discount for selling iron ore to China
The international iron ore negotiation has not determined, together with the sluggish market, the iron ore pricing system presented the more complicated situation. On April 21, one of the three major mining companies Vale issued a statement that the iron ore contract should take the provisional discount to implement in 2009, that is, 80% payment paid in cash and another 20% will be paid at the end of the price negotiation of 2009.
It is learned that the Australian mining company has given a discount to sale the long-term contract iron ore to China on spot market, which is the first time that three major mines sold iron ore to China by means of discount.
Vale said it will take the benchmark price of 2008 as the provisional price, when the contract implements. Then it will adjust the price according to the results when the benchmark price negotiation of 2009 finished. As is customary, Vale and Asian steel enterprises complete the benchmark price negotiation on April 1 every year, but the negotiation has not had a result at moment. In the past, the suppliers and buyers settles the price with the long-term contract price of last year, when the new annual price had not determined, however, mines made a concession because of the downturn market.
Vale presient of China area Zhu Kai said that it will not first release the price this year, “In the past, we are the engine and now intend to be the back.” Zhu also revealed the company will increase 25% reduction this year, at the same time, it will enhance the sales in China. He believes that Vale products are more competitive in China, because the large-scale mining companies have more cost advantage and 100mln tons iron ore supply is expected to replace by more competitive manufacturers.
It is understood that Vale Q1 iron ore shipments to Europe declined
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