Article in today's Australian. Not unexpected but just reinforces the view that AGO and AXO (by piggy back) may have further to run in the near term. Next surge in my opinion will be with AGO's announcement on Ridley (must be close by now). Enjoy the ride folks!
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Atlas hitches its wagon to iron ore price hikes
Sarah-Jane Tasker From: The Australian April 08, 2010 12:00AM
PILBARA iron ore miner Atlas Iron is tipping a 90 per cent rise in its contract prices after the major producers secured a record lift with Asian steel mills.
Managing director David Flanagan said yesterday the miner was experiencing very strong demand for its iron ore.
"In recent weeks, the FOB price achieved for Pilbara Iron ores has approached all-time record highs," he said. "We are seeing a lot of interest and most people don't appreciate how strong the demand for iron ore is."
BHP Billiton last month secured close to a 100 per cent jump in iron ore prices and moved the majority of its Chinese customers on to short-term pricing, effectively killing the controversial annual benchmark system.
BHP did not disclose the prices achieved, but analysts said it was a significant hike on last year's benchmark of about $US65 a tonne.
Macquarie Bank's London-based commodities team said in a report yesterday that the world's largest miner secured a 99.7 per cent price rise from its Asian iron ore customers for the April-June quarter from a year ago.
Citing steel industry sources in Japan, the commodities team said that BHP's $US120.08 a tonne settlement for Pilbara fines iron ore "represents a massive 99.7 per cent rise over 2009 Japanese fiscal year contracts".
Taking into account current freight rates, the settlement would result in Australian iron ore landing at about $US131.5 a tonne on a delivered Asia basis, a 22 per cent discount to current spot levels, the bank said.
Mr Flanagan added that Atlas Iron continued to see significant evidence of sustained demand for steel-making raw materials.
"In line with the timing of the recent pricing outcomes achieved by the iron ore majors, Atlas expects to achieve a similar revision upwards in the realised price of its iron ore from April 1, 2010, which is likely to be approximately 90 per cent above 2009-2010 benchmark prices," he said.
Mr Flanagan said the miner had "all but agreed" a price for its next cargo, which was an increase on previous contracts, but he would not disclose the terms, saying only that the pricing mechanism would not be controversial.
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