Cia. Vale do Rio Doce Chief Financial Officer Fabio Barbosa said the company will continue with the benchmark system of annual iron-ore price negotiations ``so long as our clients continue to support it.''
``The benchmark system is a superior system for suppliers and for customers,'' Barbosa told analysts and investors today at a meeting at the London Stock Exchange. ``We continue to support it even though some of our competitors don't support it.''
Still, some of Vale's clients have been unable to accept all the shipments of iron ore, a key steelmaking ingredient, that were negotiated in existing yearly supply contracts, Rio de Janeiro-based Vale said in a statement Nov. 11. Customers will be allowed to change the terms of their contracts based on their needs, Vale said.
``We are discussing contracts,'' Barbosa said. While Vale doesn't expect further deterioration of the markets that it serves, ``China demand for iron ore faced a very unfortunate combination of credit-tightening and natural accidents including an earthquake,'' he said.
China's $586 billion investment plan, aimed at easing a slowdown in the economy, ``recharges expectations'' for metals demand, said Barbosa, whose comments were broadcast on the company's Web site.
Last month China's Iron and Steel Association said its members support a quarterly, rather than annual, price- negotiation system because of market volatility.
Vale's current renegotiation with customers including ArcelorMittal, the world's largest steelmaker, indicates a price negotiation every three months may now be ``more suitable for market needs,'' Jayme Alves, an analyst with Sao Paulo-based broker Spinelli SA, said in a telephone interview. ``The crisis has taken away the steel sector's ability to forecast.''
To contact the reporter on this story: Diana Kinch in Rio de Janeiro firstname.lastname@example.org
To contact the editor responsible for this story: Steve Stroth at email@example.com