Vale SA, the world's largest iron-ore producer, is optimistic that demand for iron ore in the Chinese market will improve this year due to new government policies. 

Vale CEO Murilo Ferreira said on Thursday that after completing a trip to China last month, he is feeling bullish about the Chinese market.

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"I arrived from my trip to China happy. My perception is that 2016 is much better in China than we could have imagined, for example, in August of last year," Ferreira told reporters. 

Ferreira said that "measures" undertaken by taken Chinese government is already showing visible results in big infrastructural spending across the country, which will eventually help in improving the iron ore in the country.

China's economic slowdown last year could not have come at a worse possible time for mining companies, dragging down demand for commodities just as several ambitious projects were on the verge of completion.

The effects of China's economic slowdown has been so huge that prices of iron ore has come down to as low as $37 per metric ton from nearly $200 in 2011. The sharp drop in iron ore prices has had an adverse effect on the bottom line of almost all big mining companies across the world.

Some analysts feel that China's economic recovery in coming years may not help in reviving demand for iron ore. The views are much in contrast to the optimism expressed by Ferreira on Thursday.

Analysts argue that declining steel demand and increasing scrap availability will bring down demand for iron ore by 150 million in the Chinese market in the next decade.

TagsVale SA, Murilo Ferreira, china, Iron Ore In China