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Vale Negotiates Iron Ore Price with ArcelorMittal and China Steel

Brazilian mining giant Vale SA is in negotiations with its customers ArcelorMittal and China Steel Corp. in a bid to reduce contract prices. The two steel makers have been asking the company to modify its pricing system.

The previous pricing system used the prices of the last month before a new quarter, while the customers want it to use a system where the sales of the iron ore are based on prices of the current quarter. As per Jose Carlos Martins, who is the head of iron ore and strategy for Vale, the recent drop in prices saw a lot of pressure from the customers to make the company change its price strategy.

Vale is not the only company that China Steel Corp is asking to revise its rates. The Chinese company is also negotiating with BHP Billiton and Rio Tinto for similar re-pricing of iron ore. It has already planned to delay its iron ore shipments from the two Pilbara miners until it gets the discounted rates.

With Vale there will be a lowering of close to 20% in the average quarterly price with the new contracts. However the Chinese company has agreed that it would be more difficult to reach such an agreement with BHP Billiton and Rio Tinto as they account for 70% of the demand of China Steel Corp.

Joel Scanlon

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Joel Scanlon

Joel emigrated to Australia in 1995 and worked for five years in the mining industry as an exploration geotechnician, using GIS mapping and CAD software. Upon moving to the North Coast of NSW, Australia Joel worked as a graphic designer for a leading consultancy firm. After that, he ran a successful business providing web services to businesses along the eastern seaboard of Australia. During this time, he developed and launched News-Medical.Net. Joel has been working with AZoNetwork since the company was founded in 2000.

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