Electronic iron ore trading platforms could generate new price
indices and bring more transparency to the market, according to
a top executive from Vale.
Platforms such as China Beijing International Mining Exchange
(CBMX) and Global Ore will allow spot transactions to be
settled via on-screen bids and offers, bringing more clarity to
the global iron ore market.
"It is possible that these platforms will generate new indices,
which will be based on [actual] transactions," José
Carlos Martins, Vale's director of iron ore and strategy, told
Metal Bulletin during a press conference call.
"An index resulting from such platforms would, in my opinion,
have a higher predictability than the current indexes," Martins
Long-term contracts could be based on such new indices, the
executive explained - the same way it happens today with the
existing indices, which include Metal Bulletin Iron Ore Index
Vale has been already increasing sales through tenders, which
now account for 10% to 15% of the company's total shipments,
according to Martins.
This is still lower than the average 50% level seen in China
and 30% globally, he noted.
In some cases the winning price is higher than indices prices,
"Long-term contracts will still [represent] a great part of
iron ore [sales], but spot sales are likely to continue
increasing," Martins pointed out, adding that Vale remains a
"great supplier" under long-term contracts.