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Vale's changing iron ore pellet contracts to 65% Fe basis from 62pct Fe

Steel News - Published on Thu, 06 Dec 2018

Image Source: Vale.com
SP Global reported that Vale is negotiating a change in its 2019 iron ore pellet contracts from the current 62% Fe delivered basis to the 65% Fe delivered price. Vale's executive director of ferrous metals and coal, Mr Peter Poppinga, during the Vale Day investor presentation in New York said “Negotiations are close to a conclusion. "If both [ore pellet and 65% Fe delivered] indexes are linked to productivity, then it is a natural hedge for the buyers.”

Although he did not provide a hint of how much pellet prices might increase, Poppinga emphasized that there will be a price hike, not a premium

The heated demand for iron ore pellets as steel mills in China and elsewhere seek to use higher quality iron ore products in a bid to reduce coal use and carbon emissions -- drove Vale to resume operations at its Sao Luis, Tubarao I and Tubarao II iron ore pelletizing plant in this year.

Vale estimates that global pellet demand will grow by 14% to 514 million tonne this year from 452 million tonne in 2017, and by another 18% to 602 million tonne per year by 2025. Vale's pellet production capacity is set to reach close to 60 million tonne year from some 50 million tonne, including its Oman plant.

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Posted By : Ratan Singh on Thu, 06 Dec 2018
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