Iron ore prices fell to the lowest level in nearly three years is expected to continue to reduce

Following the issue the first time in three years, falling profits, earnings for the year in a few days ago, BHP Billiton CEO, Reese said yesterday that the recent mining price correction shows that the long-term price may be lower than the current price. BHP Billiton plans in each of the next two years, production increased by 10%, the price decline in credit for most products over a longer period. In expert opinion, the iron ore import prices fell to its lowest level in nearly three years, is also expected to continue to reduce.

Must and must Billiton in the earnings report said, due to weak commodity prices, the company in as of June 30 Ri's fiscal year 2012 profit slipped 35 percent to 14.7 billion Australian dollars ($ 15.4 billion), is the international financial crisis since the first time the profit decline. Iron ore over the past five years has been a cash cow for the mining sector, falling prices are significantly affect the Tamsui River Valley, Rio Tinto, BHP Billiton profitability.

 

Yesterday, 63.5% Indian iron ore futures offer 106 to 108 U.S. dollars / ton, already below the $ 120 / ton psychological barrier. Early last year, more than 200 U.S. dollars / ton price compared to prices close to "cut". The end of February 2010, Vale was the first to reach an agreement with Japanese and Korean steel mills, then the quarter reached agreement ore price is 108 U.S. dollars / ton. This means that the current ore price lower than the agreement in early 2010 price, fell to its lowest level since the end of 2009.

Analysis of the industry, the growth rate of the global pig iron production, iron ore production is much lower than the growth rate, which is the root cause of the iron ore prices fell. "In 2010 and 2011, iron ore prices rising all the way, leading to capital flooded into the mining industry, iron ore production increased rapidly after two years of development."

At the same time the demand for iron ore, iron and steel enterprises has not increased significantly. China is the world's largest importer of iron ore, from the beginning of the fourth quarter of last year due to overcapacity, China's iron and steel enterprises into a position of industry-wide losses, and experts predict that the phenomenon of short-term loss is difficult to change. The loss-making enterprises to reduce production has become an inevitable choice. In the port, high-priced inventory accumulation. While the rest of the world's major economies have also been the impact of the weak economy, iron ore demand is not strong.

Several situations contrast to an analysis, the iron ore market oversupply situation will continue. "However, industry insiders believe, the foreign miner of iron ore production to lower cost, even if the price drops, but mine corporate profit margins are still large. The last two years of rapid growth in iron ore prices have overdrawn the kinetic energy of the iron ore to rise in the next few years.

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