On April 16, President of Vale China Zhu Kai said that the company will cut its iron ore production by 25 percent this year; meanwhile it will also stop the operation of mines of low grade production and high cost.
In February 2009, China imported 8.1 million mt of Brazilian ore, with only 4.29 million in January. One market analyst has estimated that China's iron ore imports from Vale in the first quarter will rise by 40 percent compared with the same period last year.
In the context of the excessive supply of iron ore, Chinese mills are in favor of linking the iron ore contract price with steel prices, and the agreement of prices on a quarterly basis so as to minimize the risks for both parties caused by fluctuations of both steel and iron ore prices.
On the other side, Zhu Kai stated that Vale would follow China's choice, whether as regards spot price, long-term price, or index-linked price.