India is expected to contribute in a significant way to the strengthening of the iron-ore market in the medium term according to the firm. “We expect the iron-ore market to stay heated in the near future, given the lack of significant growth in supplies of high-quality iron ore and rising demand in China,” Vale SA told Milton Financials sources.
The mining giant recently announced that its third-quarter profit had more than tripled from the previous year largely due to a major increase in the steelmaking ingredient’s price.
Currently China accounts for 46% of the company’s iron-ore and pellet sales, while Japan consumes 10%, South Korea takes 4.8% and India and other Asian nation’s purchase 3.7%.
The Rio de Janeiro, Brazil based Vale is increasing capacity at Carajas, the world’s biggest iron-ore mine, and is widely expected to overtake OAO GMKN Norilsk Nickel as the globe’s largest nickel firm by mid-2011, Regal Group International has learned.
Vale said it expected iron-ore markets to remain “tight” in the short term due to lack of new supply and an increase in demand from China, the world’s largest consumer. China, in its drive to become more energy efficient is purchasing higher grades of ore such as those from Brazil.
Vale SA told Milton Financials that India is expected to be an “important contributor to the mid-term tightness of the iron ore market.” The nation has an urbanization rate of 30% compared to China’s 47% and while its industry is also comparatively small the government intends to significantly increase infrastructure spending.
“The supply and demand balance continues tight and will continue so in the coming years” as global steel output recovers, a Brazilian analysts told Milton Financials’ sources ahead of the firms results announcement.
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