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Iron ore prices would not bounce soon - Mr Wood
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Tuesday, 09 Oct 2012
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The West Australian reported that WA's top development mandarin says iron ore prices are unlikely to rebound from USD 100 a tonne in the near term, undercutting more optimistic forecasts from the state's miners and placing a fresh question mark on projects, including Oakajee port.

Department of State Development director general Mr Steve Wood made the comments to the Upper House's Estimates and Financial Operations Committee.

Mr Wood said in the absence of a massive but unlikely new stimulus package in China, which would boost demand for the key steelmaking ingredient, prices would stagnate around, or slightly below, the current USD 104 per tonne for the foreseeable future.

He told “Some would say that the iron ore price has come back to levels that are more historic for the state, and I think that is the case. No one would expect that it's headed back up to the USD 160 per tonne to USD 180per tonne level unless there is a major stimulus package in the Chinese market. My view is that it stays somewhere just above or below the USD 100 per tonne mark.”

However, a raft of miners including Andrew Forrest and Gindalbie's George Jones predict the price will recover to between USD 110 per tonne and US 120 per tonne, giving them a crucial buffer from rising costs.

Analysts suggest that sustained falls below $US100/t will force companies to cut expenditure and will stall prospective projects. It will also hit the state's royalty income.

Source - The West Australian

(www.steelguru.com)

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