Price Of Iron Ore Continues To Increase In China

Australias Fortescue Metals, barely four year after starting commercial mining

, said on Friday its year-on-year net profit surged 76% to just over $1 billion driven by resilient demand from China. Shipments by the worlds number four exporter rose only slightly to 40 million tons, but the price it achieved jumped 68%.

BHP Billiton, the world most valuable miner, is set to report a record $22 billion in annual profit on Wednesday thanks in large part to its iron business.

The stellar numbers come as global blast furnace growth over the next five years is predicted to rise by a staggering 300 million tons as Chinas construction boom continues unabated. On top of that Indias iron ore exports could halve over the same period further bolstering prices that in percentage terms have outclassed even that of gold as the world economy recovered post the 2008 collapse.

China, the worlds largest iron ore consumer, imported 618 million tons of iron ore last year, supplied by Fortescue and the worlds top three mining groups BHP Billiton, Rio Tinto and Vale. Fortescue only shipped its first ore in 2008 and has since grown to over $5 billion in revenues.

Research consultants Wood Mackenzie said in July that Chinese construction spending wont slow down until 2020 and China needs to import 1 billion mt of iron ore due to the relatively high cost and the low quality of its domestic supplies. This will keep spot prices of iron ore above $150/mt through 2015. Iron ore traded at $172/ton in July.

The Wall Street Journal reports Fortescue is planning to expand production more than six-fold.

CNBC interviewed Fortescue CEO Nev Power who said Fortescue is heavily linked in to Chinas success and Chinas growth going forward, making the company relatively immune from whats going on in the US and Europe.

Reuters reports since 2009, the price of iron ore has risen more in percentage terms than gold and oil, owing in large part to continued strong demand from Chinese steel mills.

The continuous increasing of iron ore price in China will bring a new spring to Chinese crushing industry. Believe in that the crushing equipments, such as impact crusher, cone crusher, etc, will become the new darling of the crushing markets.

by: jocelyn

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