Global Mining: “Iron Prices Recovery, not so soon,” BHP

Global miner BHP Billiton on Thursday played down the chance of a recovery in iron-ore prices, saying that recent declines reflected the reality of demand and supply in the market for the steel-making ingredient.

iron-ore has staged a near-uninterrupted drop since mid-July, shedding nearly 20% of its value.
“Everything is headed in the direction one would expect based on rational markets,” Mike Henry, president of marketing and technology for BHP, the world’s number 3 iron-ore miner, told a media briefing.

Henry said the introduction of-millions of additional tonnes into the iron-ore market by lower-cost miners, such as BHP, was driving down prices.

“As that happens, and production does a better job keeping up with demand, we are seeing prices revert back to more normal levels,” he continued.

He declined to say whether he thought current prices under $80 a tonne – the lowest in five years – represented “normal levels”.
Australia’s official forecaster this week estimated 2015’s average price at $92.40 a tonne, rebounding as higher cost producers are forced out of the market.

BHP plans to increase its iron-ore output to 245-million tonnes in the current financial year from 225-million tonnes in the year to the end of June 2014. It hopes to expand to 290-million tonnes in the next few years.

Vale wants its output to grow to 450-million by 2018 from 306-million last year.

Rio Tinto aims to boost output to 295-million tonnes this year from 266-million last year, and plans to reach 360-million by 2015.

Meanwhile, BHP said on Wednesday that it was considering a secondary listing in London for shares in its planned new spin-off after requests from some UK-based investors.(Edited by Reuters)