Iron ore sales to China were ‘coming back to normal or even better,’ Brazilian mining giant Companhia Vale do Rio Doce (RIO), or Vale, director for ferrous metals Jose Carlos Martins said during an analysts conference Friday.
‘We expect to ship a record shipment of 30 million tons in the first quarter of 2009,” Martins said.
‘We are taking advantage of lower freight rates and are gaining new customers and contracts in China. The crisis put Vale in a very good position owing to the slowdown in demand in Europe and Brazil; we can test how much of the China market we can grab,’ he said.
IG Markets reported that according to Martins, Vale has been developing a new customer base in China, and it is expanding.
‘We’re selling the ore at the benchmark price to Chinese mills who wanted to when we couldn’t supply everybody there,’ said Martins.
‘We’re selling on a CIF basis, based on Baltic freight prices,’ he added.
‘We’re in a much stronger position in China than before the crisis,’ said Martins.
Martins said he expected sales to China to be even better in the second quarter.
‘There’s a fall in [Chinese] exports, but China is keeping all its infrastructure investment and they need steel for those,’ said Martins.
Iron ore is the main raw material for steel.
‘Chinese per capita steel consumption is very far below other developing countries. China may grow less, but will continue to grow at a very fast rate,’ said Vale CEO Roger Agnelli.
Vale said key to its buoyant first quarter shipment contracts to China has been its policy on freight.
‘We built up a very competitive portfolio of ship freight contracts when the market was down, and we’ve been managing it very carefully,’ said Eduardo Bartolomeo, Vale’s director for Logistics, Engineering and Project Management.