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Friday, December 9, 2011

FMG chairman Mr Forrest sees more iron ore price volatility

Friday, 09 Dec 2011

Fortescue Metals Group, Australia's third biggest exporter of iron ore, sees strong prices for the steelmaking ingredient in 2012 with potential for quick declines similar to those seen this year.

Mr Andrew Forrest chairman of FMG said that "Prices will be reasonably strong, but don't be surprised if there's a couple of sudden dip. I call reasonable anything above USD 100. That's a good sustainable iron ore price."

Prices for the steelmaking raw material delivered into China slumped in October, falling 31% for the month, including the biggest one day drop in more than two years as demand waned. Rio Tinto Group, the second biggest exporter, last week said some Chinese buyers have had credit difficulties while customers are still purchasing all its output.

Mr Forrest said that "All of our customers have been very strong and I would point out that Chinese growth has collapsed to over nine per cent. If any other economy had over nine per cent they would all be drinking champagne."
China's economy grew by 9.1% in the third quarter as compared with a year earlier, the slowest pace in two years. The credit tightening policy has curbed demand and prompted local mills including Baoshan Iron & Steel Co. to cut prices. The debt crisis in Europe has raised concerns that economic growth may slow in emerging countries.

Mr Forrest, who controls about 32% of Fortescue, which has a market value of AUD 15 billion, said that "Fortescue's in a unique position in that it's very popular in China."

Since October 31st 2011, the price of ore delivered to China's Tianjin port has rebounded 18%. It dropped 0.1% to USD 139.40.

(sourced from

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