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Brazil is optimistic about China iron ore consumer market

Carajas project annual output of 109
million tons at present, it is the world’s largest iron ore project, which is
expected to reach full capacity of production in 2018 and reach 230 million
tons. Exploitation of their planning period is 40 years, extraction volume is
expected to reach 4 billion tons, the future will continue to expand the scale
according to demand.

Vale last year increased its investment in
high-quality ore. July 2012, Carajas mine of development company Vale announced
again, invested $ 19.5 billion to develop the Southern District S11D mine, this
is the highest investment of iron ore project in the world so far.

International market for such high-quality
ore demand remains strong, therefore, its market price is relatively stable,
This mine will be the future Vale continues to lead the world iron ore industry
of protection.

When reporters interview in Carajas, there
are two China-related new attracts the attention of the global steel industry.
First, as China’s economic recovery, the Brazilian iron ore exports to China
increased rapidly. According to Brazil, Folha de Sao Paulo newspaper reported
that the Brazilian iron ore exports to China in September reached 74.6 million
tons, MoM growth of 8%, year on year growth of 15%, which create a history
record. Second, on October 18, “Chinese version of” iron ore futures was
listed in Dalian Futures Exchange, China enhanced pricing.

Although people talk about the iron ore
price rises, repeatedly stressed that stable development of China’s economy, U.S.
and European economic recovery are the two main factors, but they predict the
future is not very optimistic. Vale executive director Mading Si think 2015
iron ore market will basically reached saturation. By 2018, when the excess
capacity could reach 5-6 percent, by then the price will remain at $ 100 or
more, but is unlikely to reach current peak, the main reason is the major iron
ore producers are expanding production capacity.

China needs to import more than 60 percent of
iron ore very year. The expansion of China’s urbanization and Chinese exports
of finished steel products increased, making China become chasing object in the
market by the world’s major iron ore suppliers.

Over the years, China in the international
iron ore market lack of pricing power, Long-term restricted to Vale, Rio Tinto,
BHP Billiton etc. companies. Global iron ore production capacity to enhance and
the importance of the Chinese market, for China increased pricing to provide
the conditions. Iron ore futures launch will help to gradually change this
passive situation which is China made a bold attempt for greater pricing power of iron
ore. First use
of RMB for iron ore futures Indicates a new era for globally. Mading Si recently
in an interview also said that iron ore pricing is increasingly dependent on
the Chinese market.

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