Vale settles ore prices in Japan, Korea: pellets down 48%
Brazil’s Vale has concluded 2009 iron ore prices with Nippon Steel and Posco agreeing to a 28.2% cut for fine ore and 48.3% for pellets. Nippon Steel is refusing official comment but says Vale will make a formal announcement later today. JFE Steel says it is still negotiating but a deal is expected soon.
Nippon Steel and Posco have been jointly conducting their annual iron ore negotiations with Vale since 2007. Kobe Steel is also believed to have settled for the same reduction.
The cuts take the pellet price down to $1.138/dry metric tonne unit fob Tubarão, Steel Business Briefing calculates from last year’s price of $2.202/dmtu. The Carajás fines price falls to $0.899/dmtu fob on the same calculation.
The fines price cut is regarded as being in line with Rio Tinto’s benchmark price settlement, after clawing back the freight differential that the Australian mines achieved last year.
But the sharply higher percentage cut for pellets reflects reduced demand for this premium grade of iron ore as steel companies scale back their blast furnace productivity rates. The premium they are willing to pay for pellets over sinter fines has been slashed by 75% to only $0.239/dmtu, SBB also calculates.
Vale's concession on pellet prices is seen by one observer as an attempt to get some of its idle pelletizing plants back into operation.
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