Rio Tinto or BHP Billiton will be expected to set the benchmark iron ore price this year after the traditional price-setter, Vale of Brazil, said it would pass the role on to its Australian competitors.
Vale’s decision has come as a surprise to the market, which had predicted prices would be settled early, 20 to 30% under the benchmark, in an effort to increase sales.
Vale’s ferrous division manager Jose Carlos Martins told attendees at the annual results briefing held in Rio de Janeiro that the company had decided to change tact.
“We are used to being the price-setter, but this year we have decided to wait and see what will be fixed between the Australians and Chinese, because I think China is now the main seaborne market and the Australians are the biggest suppliers [to China] and are closer, so we will tend to let them fix the price,” he said.
Vale last year received price increases of 65 to 71% for its iron ore, but the Australian miners held out for an 85% increase, which took into account the lower cost of shipping ore from Australia to Asia.
Rio Tinto declined MINING DAILY’s request for comment.