Beijing Olympics would be key for Vale in iron ore spin

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(Bloomberg) – Vale SA, the world’s second-largest iron ore producer, sees the Beijing Winter Olympics as the tipping point for the steelmaking ingredient.

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Iron ore futures have lost about half their value since mid-July as China limited steel production to contain pollution and energy use. Some of those efforts were to ensure clear skies for the February Olympics, according to Luciano Siani, Vale’s director of strategy and business transformation.

As a result, prices may continue to weaken heading into games, ahead of a likely turnaround in the second and third quarters of next year, he told reporters in New York on Monday.

The recovery argument is also supported by signs that Chinese policymakers are already considering measures to boost growth, Siani said. In addition, supply is limited, with the La Niña weather phenomenon potentially affecting Australian operations and rain would start earlier in Brazil, he said, while India will absorb more of its domestic production.

“So we see good price prospects in Q2 and Q3 because of that,” Siani said.

Still, he doesn’t see the kind of swings seen over the past year ever happening again, and prices are unlikely to drop much below $ 90 a metric ton or exceed the $ 120 level on the upside.

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Vale Sees Beijing Olympics as the Key for an Iron Ore Turnaround

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