July 17 (Bloomberg) -- Vale SA, the world’s biggest iron- ore producer, sees prices for the steelmaking ingredient recovering to $110 a metric ton as China’s demand keeps growing.
Iron-ore prices, which fell below $90 per dry metric ton last month, have been curbed by higher supply from Australian producers in the first part of the year, Vale Chief Executive Officer Murilo Ferreira said in an interview today. No additional supply by Australian companies is expected in the second part of the year, helping prices to recover, he said.
“There is no reason to change our conviction that $110 is a sustainable price in the long-term,” Ferreira said in Brasilia, where he was attending a Brazil-China summit. “It’s normally imprudent to make short-term forecasts.”
Mining companies, including Vale and Rio Tinto Group, are expanding iron-ore production, betting increased volumes from their deposits will more than offset declining prices. The key ingredient to make steel lost 27 percent so far in 2014 and has been trading below $110 a ton since April 28.
Prices will remain around $100 a ton after declining from “artificially high levels,” Rio Tinto Chief Executive Officer Sam Walsh said earlier today in an interview with Bloomberg Television. The steelmaking ingredient has chalked up two straight quarterly losses and slid to $97.50 a ton today, according to data from The Steel Index Ltd.
Shares of Vale dropped 1.3 percent to close at 28.16 reais in Sao Paulo, the first decline in four days. The stock lost about 14 percent since the beginning of the year.
--With assistance from Juan Pablo Spinetto in Rio de Janeiro.