Vale Predicts Record High for Iron as China Stokes the Market

20 January 2010 (Last Updated January 20th, 2010 18:30)

Vale said that its iron ore exports could reach record volumes this year due to a boom in worldwide demand. The Brazil-based miner said strong global demand has been created by a surge in China's commodities imports as well as recuperation of the European economy. Speaking to

Vale said that its iron ore exports could reach record volumes this year due to a boom in worldwide demand.

The Brazil-based miner said strong global demand has been created by a surge in China's commodities imports as well as recuperation of the European economy.

Speaking to Reuters, Vale executive director of ferrous metals Jose Carlos Martins said Asia is pulling the strings in the global market at present, especially when it comes to iron ore. He would not provide information, however, on upcoming price negotiations with China for 2010.

"You have a scenario of recovery in the West and strong demand in Asia - the combination of those two things gives you a scenario of scarcity," Martins said.

China's demand growth is expected to trigger a 25% to 50% rise in prices of iron ore this year.

Every year Vale, BHP Billiton and Rio Tinto negotiate iron ore prices with China under a 40-year-old benchmarking system.

Vale, which has a current iron ore production capacity per year of 310 million tons, said it plans to increase the annual capacity of the Carajas mine by ten million tons.