LONDON Vale SA will cut pellet production in October in the face of falling demand.
Operations at Vales San Luis pellet plant in Brazils Maranhao state and its Tubarao plants in Espirito Santo state will temporarily halt Oct. 8 and Nov. 13, respectively. The two plants produced 4.93 million tonnes of pellet in the first six months of 2012, accounting for 18.3 percent of Vales total pellet production.
Vale said the production cut was in response to changes in raw material demand from the steel industry. "There is a contraction in pellet consumption in favor of greater use of sinter feed," the Brazilian miner said Thursday.
Vale said that an additional portion of its iron ore production would be allocated toward increasing the supply of sinter feed, reducing the availability of feed for pelletizing.
The producer said that it continues to invest in iron ore pellets and remains confident in the long-term market fundamentals of the iron ore market.
Iron ore pellet prices have fallen in line with iron ore fines prices in recent months.
AMM sister publication Metal Bulletins 65-percent iron pellet index dropped to as low as $110.43 per tonne c.f.r. China in the first week of September before rebounding to $126 in the last week of September.