A source from a major independent pig iron producer, in the Brazilian southeastern state of Minas Gerais, told SteelOrbis that that he is paying Vale $25.50/mt, ex-mine, no taxes included, for high quality small lumps ore, locally called hematitinha.
Such price compares to $34.50/mt in December, following weeks of negotiations that resulted at the time in a 15 percent discount from the previous price.
The source believes that, with the discount, Vale is trying to increase the volume sold in the domestic market, already affected by the idling of blast furnaces of the integrated producers, while the independent pig iron producers operate at 18 percent of their combined production capacities, with indications that such rate could go further down to 10 percent by the end of Q2 2016.
The source mentioned that lower quality small lumps, in the 6.35mm to 25mm thickness range, are now sold by small miners at $20/mt, ex-mine, no taxes included, against $28.50/mt in December.
He added that, with the lower iron ore prices, the company decided for the restart of its second blast furnace, operating now with its two blast furnaces, but not at full capacity: “our production of the foundry grade product is now sold with only one month in advance, so depending on the demand and price we can decide to shut the blast furnace again in the short term,” he concluded.