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| Vale Virtually Accepts 20% Discount For 2009 Iron Ore Prices |
| = Subject to adjustment after benchmark price settled = |
|
ore commercial contracts flexible, namely the Company is currently receiving 80 percent of the sales in cash and will receive 20% later when 2009 benchmark price will be settled. In other words Vale says it has accepted provisional sales prices for longterm contracts to be equivalent to 80% of 2008 benchmark prices, with the remaining 20% subject to posterior adjustments based on the outcome of 2009 benchmark price negotiations. Iron ore prices are normally negotiated and fixed ahead of a new fiscal year to start in April, but when no settlement is made by the end of March, the price of the previous year or 2008 is customarily used as a temporary price during a half year from April, and when a new price is agreed for the new year, adjustments are made. If the historically highest price of fiscal 2008 were used as the temporary price, it should continue to suppress steel milling operations, so some Chinese mills have called for a large discount. What Vale has announced this time is practically the same with what Rio Tinto has recently presented to Chinese mills as a 'temporary price', which they have refused. |
| last modified : Mon 27 Apr, 2009 [10:49] |
