BRASILIA Jan 21 The fundamentals of the Chinese
economy remain solid and the recent drop in iron ore prices is
temporary, Murilo Ferreira, chief executive of Vale
, the world's largest iron ore miner, said on
Iron ore prices on the Chinese spot market
have fallen 8.2 percent since the beginning of the year to
$123.20 a tonne, their lowest level in six months, according to
Steel Market Intelligence newsletter.
"There was a recent toughening in credit policy in China and
the steel companies were certainly affected," Ferreira told
reporters after a meeting at Brazil's Mines and Energy Ministry.
"The companies have ended up working with lower stocks, but
that is a transitory position," he said.
China is the world's largest steelmaker and also the largest
purchaser of iron ore, the main raw material for making steel.
The economy of China, Vale's largest market, grew 7.7 percent in
2013, its slowest performance in 13 years.
Chinese steel and iron ore futures slid on Tuesday,
reflecting thin demand from the world's top consumer of the two
commodities that has also resulted in spot iron ore prices
falling by 7 percent this month.
Tighter access to loans and slow steel demand are keeping
Chinese steel makers from replenishing iron ore inventories
ahead of the week-long Lunar New Year break.
Vale, the world's No. 2 mining company, announced in
December it had lowered its investment budget for a third
straight year to focus expansion on its main iron ore business.
Ferreira said the S11D, or Serra Azul, mine expansion at its
giant Carajas iron ore complex in the Amazonian state of Para in
Brazil is advancing rapidly and work there is 48 percent