Amid rumors that Brazilian miner Vale (NYSE: RIO) would be increasing its ore prices, company president Roger Agnelli clarified in a press conference that the world's largest iron ore producer is still in negotiations with Chinese steelmakers.
"In China, our traditional clients have always had long term contracts," Agnelli said Friday. "But what's happening now is that new clients, usually mid and small-sized steelmakers, have been coming to Brazil to buy ore on the spot market and this is resulting in a market unbalance."
The Vale CEO said contract negotiations are too complex to talk about with the media.
"Contract negotiations vary. There is a different contract for each customer, a specific type of quality and specific region. It's not something simple," he said.
Agnelli said Australian iron ore companies have an advantage when it comes to pricing due to a freight differential because of their proximity to China. Instead of long term contracts, however, Australian miners have been selling ore at spot prices.
Meanwhile freight prices have been plummeting and the market is starting to adjust.
Agnelli also spoke of his last trip to Asia when he told clients that Vale had to bring prices charged to Asian clients up to par with European prices.
"This was spoken in a calm and open manner," he said. "We have been negotiating. What I can say now is that talks continue. Our utmost respect to our clients is absolute, our long-term view remains."
Regarding the rumor that Vale could be halting shipments of iron ore to China, Agnelli said this is absolutely untrue. In fact, he said the company does not have a single tonne to spare at Vale's ports scattered around Brazil.
"We don't have even one extra tonne of ore at our ports," said Agnelli. "In fact, we have been setting records in iron ore transportation."
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