Iron Ore Prices Seen Rising 30% in 2008

Bloomberg reports analysts' median estimate of $66.40/ton for 2008 prices of iron ore benchmark shipments from Australia represents a 30% increase compared to $51.47 in 2007. Sustained high demand from China's steelmakers, who are said to be raising production 15%, is credited for the expected price increase. Mining companies and customers are scheduled to begin annual price negotiations in October for shipments starting in April. A Melbourne, Australia-based Goldman Sachs commodities analyst, says demand will outstrip supply for years, resulting in price increases until 2010. Merrill Lynch analysts in a report published Wednesday, said low inventories at China's ports and supply shortages could push prices higher by more than 50% in 2008. HSBC expects price increases of 40% in Australia and 30% in Brazil. BHP's ADRs lost 1.7% to $75.71 on Wednesday, but were last up 1.5% in early trading in the UK. Rio Tinto's ADRs lost 0.75% to $330.32, but were also trading to the upside, by 1.6%, in early activity in the UK. Cia. Vale do Rio Doce's ADRs gained 2.9% to $32.97.

Sources: Bloomberg
Commentary: BHP Billiton: Good Looking Stock With Great Ore • 10 Steel and Iron Stocks to Strengthen Your Portfolio • Rio Tinto Rises on Takeover Rumor
Stocks/ETFs to watch: BHP, RIO, RTP. ETFs: SLX

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Comments

[user123455:]

MT, NUE and ATI look good to me. I'm currently invested in NUE. Higher demand coupled with industry consolidation should propel the sector to great returns IMO.

milliondollarportfolio...

2007 Sep 27 09:13 AM