Vale, the Brazilian iron ore miner, yesterday defended itself against Chinese accusations that its iron ore prices are too high, saying that supply and demand are fixing prices, not the big iron ore miners.
Roger Agnelli, Vale chief executive, told a press conference in Shanghai: “Vale is not fixing prices: who is fixing the prices is the market.”
Steelmakers and Chinese officials have repeatedly complained about the concentration of power in the world iron ore market in the hands of three big producers, which also include Rio Tinto and BHP Billiton.
钢铁制造商和中国官员多次抱怨称，全球铁矿石市场的权力集中在了3家大型铁矿石生产商手中，其中还包括力拓(Rio Tinto)和必和必拓(BHP Billiton)。
The dispute has ramifications for the global economy as iron ore prices feed through to steel prices, impacting the price of everyday goods.
Steelmakers were forced to accept a 90-100 per cent increase in iron ore prices in the second quarter after the annual benchmark system of pricing broke down.
Carlos MartinsSpot Australian benchmark iron ore prices have fallen 22 per cent since their peak in April and were yesterday down 0.8 per cent at $144 a tonne.
Vale privately expressed concern that Chinese steel mills might default on their iron ore contracts if spot market prices fall below quarterly prices.
Chinese steel mills were accused of defaulting on their annual contracts in the second half of 2008 when spot prices fell below contract prices for the first time as a result of the global financial crisis.
Asked if this could happen again, Mr Martins said: “It's a possibility but I hope they are not going to do it, because we have contracts, we have a long-term commitment – and long-term commitment has to be for both sides.”
In other commodity markets yesterday, oil prices slipped after data showed slowing growth in Chinese and European manufacturing.
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