Mining News and Journal

Brazilian mining company Vale iron ore prices will increase about 35 percent to as much as $ 145 per ton in July as part of a switch to quarterly pricing, a Brazilian newspaper on Sunday, Markets widely iron expect miners to raise prices to make them into line with the spot ore prices following a shift from a decades-old benchmark system, although analysts were not sure exactly how the new pricing mechanism works .

O Estado de Sao Paulo newspaper does not say where it details the percentage of the price increase by Vale (VALE.N) (VALE5.SA obtained), the world’s largest iron ore miner.

But Vale cited ferrous metals director Jose Carlos Martins confirmation of the company would raise prices for steel producers.

“In the second quarter, our prices well below the spot market in China,” Martins told the paper.

“Under the current formula, we expect to recover much of this difference in the next quarter, which starts in July,” he said, apparently referring to a system of indexes based on spot market prices to adjust.

The top three of the world’s iron ore miners – Vale and Anglo-Australian BHP Billiton (BHP.AX) and Rio Tinto (RIO.L) threw the benchmark this year in favor of the quarterly pricing, but the exact nature of how they calculate the price has not been fully released.

The exact amount of the increase will be determined on Tuesday, the newspaper said.

A Vale spokesman said the company would not comment on the information.

Interfax reported Vale this month, Chinese steel mills to ask for an iron ore price of $ 160 per tonne to be paid in the third quarter – 23 percent more than in the second quarter – citing an anonymous source in Wuhan Iron & Steel.

Vale has said it was open to negotiate various indices or a basket of various indexes and averages, but has not announced that its index is usually based on fixed prices.

Some analysts said the company was the Iron Ore Platts index, which is cleared by the Intercontinental Exchange (ICE) is used. Currently there are three index providers: Platts, the Steel and Iron Ore Index Metal Bulletin Index.

Spot steel prices have fallen about 20 percent to 145 U.S. dollars per tonne since late April highs near 185 U.S. dollars as buyers fret about the resilience of the Chinese economy and the strength of steel demand in the second half of the year.

source:reuters

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