BHP Chief Executive Predicts the Price of Iron to Stay High

Submitted by Jim Thesiger on 10 May, 2010 - 06:22

Marius Kloppers, the chief executive of Australia based mining giant BHP Billiton (BHP) stated that he is looking forward for the iron price to remain closer to a record high due to the rising Chinese demand for steel. Although the concerns regarding the economic melt down in Greece did slashed the prices of exchange-traded metals during the earlier month by as much as 10 to 20 percent, the implied price for the iron ore from Australia is still at a record high. It is to be mentioned that iron ore is expected to be the biggest export product for Australia for the current financial year passing coking coal.

In an interview, the BHP Billiton chief executive termed the iron ore market as an “undersupplied” one and added that in reality, the price is significantly high. Mr. Kloppers also included that the trade activity is giving the impression that the industry is going to stay almost at the same level in the coming days where it is currently standing. It is to be mentioned that the Chinese spot iron ore prices fell to some degree in the recent weeks taking the price to $US185 a tonne. However the figure is still within the 10 percent of the record price of $US197.50 per tonne which was set during the year 2008 before the global economic melt down began.

The Australian miners like BHP Billiton and others are managing to get more for the iron ore which has been sold at the spot price in comparison with what they would receive right before the crisis due to the fact that the freight (something that is paid by the customers) is currently up to $US40 a tonne less than it was during the peak before the crisis started. The implied Australian iron ore price is currently around $US170 per tonne at the Pilbara ports at the present spot freight of $US15 a tonne where during the earlier boom it remained at $US150 a tonne.