The Estado news agency reported that Brazilian miner Vale SA is prepared for Chinese steel mills definitively moving to the ore spot market.

The paper quoted sources at Brazilian miner Vale SA as saying that the company was prepared for Chinese steel mills definitively moving to the ore spot market.

The anonymous sources said that however, Vale does not see this as a guarantee Chinese mill will follow suit. Instead, the Chinese may abandon the benchmark system altogether, where term rates are set by leading suppliers and consumers.

According to the sources, Vale has not given up hope of a long-term China supply contract but negotiations have been extremely hard and local large steel mills have been signaling their intention to stay in the spot market. China is currently the largest iron ore consumer in the world, giving it greater bargaining power.

A Vale source said that "The Chinese have a lot of firepower in these negotiations. It's a delicate task and they want to stay in the spot market at the moment."

(Sourced from Estado news agency)