September 24, 2008 / 11:14 PM / 9 years ago

CEO says Vale to stick to China price demands-report

BRASILIA, Sept 24 (Reuters) - Brazil’s mining giant Vale VALE5.SA will stick to demands for higher prices for the iron ore it exports to China, its CEO Roger Agnelli told local media, adding many firms already had accepted the price rise.

An executive at the China Iron and Steel Association last week said China’s steel industry, the world’s largest, would inevitably stop using iron ore from the Brazilian miner if it insisted on the price increase.

“The Chinese market continues to be very strong,” Agnelli told Brazilian magazine Epoca in an interview.

Asked whether they were looking for a readjustment of 11 percent, Agnelli said: “Around that. Basically to take out the price differential between Asia and Europe.”

“Various Chinese companies have already accepted. But we are in the middle of negotiations,” he said, adding the price increase would be for 2008 and there would be other negotiations next year.

Vale has asked its Asian customers to pay about 12 to 13 percent more for iron ore under 2008 term contracts to bring their FOB prices in line with those paid by European steel mills.

China’s steel association has sent a formal letter of complaint to Vale over its demands. Chinese steel mills met at the association’s headquarters earlier this month, but failed to hash out a clear strategy for opposing Vale’s hike.

Vale’s position appeared to have softened earlier in September when Agnelli told reporters the price rises it sought were for next year, although e-mails received by Chinese steel mills had said higher prices would be effective on Sept 1.

The attempt to raise prices months after the annual prices had already been negotiated was unprecedent and followed a successful effort by Australian miners BHP Billiton and Rio Tinto to get a larger price rise from Asian mills for 2008.

Reporting by Ana Nicolaci da Costa; Editing by David Gregorio

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