August 06,
The implementation of the Iron ore index pricing by three miners (Vale, Rio Tinto and BHP Billtion) did not run well.
Vale’s sales share in China declined sharply in June. However Rio Tinto and BHP Billiton had been gradually switching to more flexible pricing instead of index pricing in order to maintain their sales performance in China.
Customs statistics show, market share of Brazilian fines in China’s Iron ore import market was 28% (142 million tonnes) in 2009, which decreased to 23% (51.22 million tonnes) in the first five months of this year.
Vale claimed the index pricing could “let steelmakers know the price of next quarter initially, helping them to control production costs and stocks.”
Although it sounded perfect, the truth was not that good, said a raw material import director of Yangang, Hebei, adding the index pricing forced us to break the agreement and turned to spot market now.
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