Bloomberg News

Vale Says Iron Ore Stabilized After Hitting ‘Rock Bottom’

November 09, 2011

(Updates with comments from Vale official from second paragraph, share price in last paragraph.)

Nov. 8 (Bloomberg) -- Vale SA, the world’s largest iron-ore producer, said prices for the raw material have stabilized and are recovering from “rock bottom” levels earlier this year.

Lower-than-expected production and strong demand from China, India and South America will boost demand for iron ore in the coming years, Paulo de Freitas Nogueira, a sales-planning manager at the Rio de Janeiro-based company, said today.

Investment costs more than doubled during the past five years and the recent plunge in iron-ore prices forced many producers to shut their mines, Nogueira said during the Americas Iron Ore Conference in Rio.

“Essentially producers stopped producing, with that the market started stabilizing,” Nogueira said. “We believe it has reached rock bottom.”

Iron ore for immediate delivery gained 8 percent since reaching its lowest level in almost two years on Oct. 28. The price rose 1 percent to $126.30 a ton today, its seventh consecutive increase, according to The Steel Index Ltd.

Vale fell less than 1 percent to 42.37 reais at 1:59 p.m in Sao Paulo. Before today, the shares had fallen 12 percent this year.

--Editors: Jasmina Kelemen, Tina Davis

To contact the reporters on this story: Juan Pablo Spinetto in Rio de Janeiro at jspinetto@bloomberg.net Peter Millard in Rio de Janeiro at pmillard1@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net


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