Tsuen Wan International: Vale not concerned that iron-ore demand in China may slow.

July 5, 2011 - PRLog -- The globe’s largest iron-ore producer expects no slowdown in demand from China as the country seeks to build 36 million low-income houses in the next five years, Vale SA’s Chief Financial Officer Guilherme Cavalcanti informed Tsuen Wan International.
The country will continue leading global consumption of the steelmaking raw material as it invests in new dwellings and infrastructure, Cavalcanti said.
Difficulties in bringing new projects to the production stage will cause a demand-supply imbalance likely to last six or seven years, he said.

“We aren’t feeling any contraction in demand for iron ore mainly because infrastructure building is still going on in there and also social housing,” Cavalcanti informed Tsuen Wan International. “The urbanization process in China is far from over, so we think that these will keep leading the demand for iron ore.”

China’s factory index fell to the lowest level since February 2009 recently, adding to concerns that 12 reserve- requirement increases and four interest-rate increases since the start of last year are hampering growth in the world’s second-largest economy. Vale shipped about 41% of its total iron ore and pellets sales to China in the first-quarter.

“The tightness of the market, because of the difficulties in many companies to deliver the projects to put supply on, will probably leave the market imbalanced for six to seven years,” the CFO told Tsuen Wan International.

Earlier this month Vale shaved its long-term iron-ore output forecast by about 10% to 469 million metric tons by 2015. The company said earlier this year that it delayed the start of four projects for as many as two years amid equipment, workforce and licensing constraints.

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