Photo: Vale Logo. Credit: Corporate Site.
Less than a month ago, Stuart covered Brazilian mining giant Vale’s plans to hike the prices in their iron-ore contracts with Chinese buyers. On September 1, those prices increased 20 percent — and now, it seems like that increase is set to develop further. “Companhia Vale do Rio Doce [Vale] confirmed Tuesday that it was in talks with Asian steelmakers to raise iron-ore prices for a second time this year,” the Wall Street Journal recently reported. “In a statement, Vale said that it was in talks with Asian clients to bring reference prices for iron ore in the region in line with iron ore prices paid by European steelmakers.”
Vale expects these price increases to have a positive effect on overall revenue. The company says these price increases could “boost revenues less than 3 percent compared with total revenue in the 12 months through June 2008, which was $35.5 billion.” It’s unknown how Asian steelmakers might respond, although we can’t imagine a pleasant reaction. As we have mentioned before, however, Chinese steelmakers still pay less for iron-ore than European steelmakers.