Vale iron ore head sees Asia driving steel
By Steve James
NEW YORK (Reuters) - Iron ore will continue to sell in the range of $120 to $180 per tonne in the near term, while China, a driver of Asian steel consumption, constrains its economy in the face of inflationary threats, a senior executive of Brazilian mining giant Vale (VALE5.SA: Quote)(VALE.N: Quote) said.
But the market for the key ingredient for steel manufacture is expected to grow as Asia builds up its infrastructure and Western steelmakers stagnate, Jose Carlos Martins, Vale's executive director for iron ore and strategy told Reuters.
"For the bigger part of this year, the price was around $180," he said. "I don't believe in the next year the price will go above 180 or below 120. The scenario is moderate to good."
Earlier, Vale slashed its capital spending budget for 2012 by 11 percent and pushed back its largest iron ore project by two years in the face of falling commodities prices and environmental delays.
During an interview at the New York Stock Exchange where the company's executives met Wall Street investors, Martins said global steel production was a tale of two halves of the world since the 2008 recession.
"In Europe and America, in the western world, the market has kind of stagnated. Steel production in the western world is 15 to 20 percent below pre-crisis levels. So the western world has never recovered," Martins said, noting there was a new round of financial restraint, "which is not good for steel consumption because it's very much related to construction and infrastructure.
"Those countries don't have enough space to promote growth, so we do not see the western world moving, probably it will be stable," he said.
But in contrast, he said China was the main factor behind steel consumption growth in Asia. Continued...