The global iron-ore market is set to tighten in the second half of the year as China imports more and produces less, according to the biggest miner, Vale SA.
Chinese imports of the steel-making ingredient will increase with domestic production down by about 200 million metric tons after prices tumbled 60 percent from a 2013 peak, Vale Chief Executive Officer Murilo Ferreira said at a Rio de Janeiro conference organized by Fundacao Getulio Vargas.
“Several Chinese producers — a higher number than people realize — have already left the business,” Ferreira, 61, said Wednesday. “I think we will have a better second half in China than the first half in terms of steel.”
Since reaching a decade low in April amid supply expansions in Australia and Brazil, iron-ore prices have rallied 39 percent on prospects of a pickup in Chinese steel demand and as high-cost mines close. The benchmark rose 1.7 percent to $65.39 a dry ton on Wednesday, the highest since Jan. 23, according to an index compiled by Metal Bulletin.
The global seaborne market for the key ingredient in steel production is expected to grow 3.6 percent to 1.44 billion tons this year, Ferreira told reporters during the conference, adding that production in other “exotic” countries is also receding due to higher output costs.
Vale shares jumped 3.9 percent to 17.65 reais at 10:43 a.m. in Sao Paulo on Wednesday.
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