The marked increase in iron ore spot sell tenders by Brazilian mining giant Vale in the last two weeks might not be an indication of the miner's return to selling regularly via tenders, a company source and several of Vale's customers said Thursday.

 

Vale offered three iron ore cargoes via spot tenders in the last two weeks, compared with an average of two tender offers per month since July.

 

In its latest tender issued Thursday, the miner offered 65.89%-Fe Lump Ore Urucum, trade sources who were invited to bid told Platts.

 

Vale did not offer any cargoes through open spot tenders from April to June this year, but has offered seven spot cargoes in the third quarter so far -- two in July, two in August and three in the first two weeks of September.

 

"I'm not sure whether the increased number of spot tenders will mean Vale is going to [sell on an open spot basis] more actively. It really depends on the market and on other situations," a source at Vale said. "Every day, the guys [in the company] come in and see if there are enough cargoes [to offer through spot tenders] or not. It all depends."

 

A Shanghai-based customer of Vale said the company had met with the miner recently, and did not get the impression that there would be more spot material coming from the miner anytime soon.

 

"It does seem in the past two weeks that Vale is offering more cargoes. But they told us their production levels will not be increased this year," the Shanghai-based source said. "They said [annual production] will remain the same at around 306 million mt."

 

In the first-half of this year, Vale produced 135.4 million mt of iron ore, 6.5% below year-ago levels and 2.7 million mt below the company's projected levels. The company said in August that its production performance was affected by an extended rainy season and "the lack of flexibility of deeper pits under rainy conditions."

 

But a Beijing-based trader said he expected to see Vale's spot tenders "appearing more frequently in end September and October".

 

"I haven't heard from them on whether they'll regularly issue spot tenders from here on, but the increased number of tenders since last week should be a sign [that they will]," the trader said. "In the third and fourth quarters, the weather in Brazil is seasonally more conducive for mining, so I think we'll see them offering more spot cargoes."

 

Vale also said early August that it aimed to meet budgeted second-half 2013 iron ore shipments of 167.8 million mt as it recovers from slower production rates in the first half of this year.

 

Despite the increase in iron ore spot tender offers by Vale in the third quarter this year, it is still dramatically lower than year-ago levels. In Q3 2012, the mine issued 57 spot tenders for iron ore, according to data compiled by Platts.

 

In the second half of March this year, Vale had switched from issuing spot tenders to selling iron ore through direct offers to selected customers. The direct offers were made on a floating price basis, rather than on the fixed-price basis typically seen in its spot tenders. But Vale returned to the spot tender market in July this year, a move that its customers said then was likely just a means to sell additional tonnage it had on hand at the time.