Brazil’s Vale Says Iron Ore Price Fell On China Credit Restrictions

RIO DE JANEIRO -(Dow Jones)- Brazilian mining company Vale SA (VALE, VALE5.BR), the world’s biggest iron ore producer, said prices for the steelmaking raw material slumped in recent weeks due to credit restrictions adopted in China.

Steelmakers and traders haven’t been able to buy ore in the same way or volumes as in the past due to the restrictions and this has pushed iron ore spot prices down to about $ 120 a metric ton currently, Jose Carlos Martins director at Vale, told analysts Thursday on a conference call.

Spot market prices were $ 172.60 a ton a month ago, according to independent pricing services.

Greater export availability from India and lower demand from European steelmakers have also coincided to aggravate the downward pressure on iron ore prices, Martins said. Vale has recently sent two or three extra shiploads of iron ore to China due to cancellation of some orders in Europe, he said.

However, market demand fundamentals continue to be strong and there are indications that prices could start rising again from mid-November as the onset of winter in China will reduce local ore availability, Martins said.

In addition, new measures announced Wednesday in China may lead to a normalization of credit policies, said Vale Chief Executive Murilo Ferreira on the call.

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