The CEO of Brazilian miner Vale (NYSE: RIO), Roger Agnelli, reportedly said steelmaker ArcelorMittal has suspended some of its long-term iron ore sales contracts with the company.
"ArcelorMittal is sharply reducing production," Agnelli told local press at a fashion event in Rio de Janeiro. "How am I going to make [ArcelorMittal CEO] Lakshimi Mittal honor contracts? Where is he going to store the ore?"
Agnelli added he was not sure of the size of the supply reductions to ArcelorMittal but said he will meet with the steelmaker shortly to broach the issue in further detail.
On Thursday (Oct 6), one of ArcelorMittal's Brazilian subsidiaries, ArcelorMittal Tubarão in Espiríto Santo state, said it could reduce production by up to 35% in the next three months.
However, analyst Antônio Carlos Goes with Senso Corretora said he does not believe ArcelorMittal Tubarão's cutbacks will reach 35%.
"I really do not believe this is going to happen" Goes told BNamericas. "Cutting down 450,000t per quarter would be disastrous."
Goes said the cutbacks will likely average some 15% of ArcelorMittal Tubarão's quarterly production, or a reduction of approximately 225,000t per quarter.
Rio de Janeiro-based Vale is the world's largest iron ore producer and ArcelorMittal is the globe's biggest steelmaker.
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