The mining boom is not only helping majors such as Rio Tinto and BHP Billiton but also iron ore juniors, thanks to China and India's insatiable demand for steel.
Some 59 Australian listed iron ore juniors with a combined market capitalisation of $37.9 billion gained 53 per cent on their share price over the year to this month, a report by mining sector analysts Resource Capital Research (RCR) found.
That compared with just 3.3 per cent for the S&P/ASX200 during the same period.
The best performers included Equatorial Resources Ltd, up 1,653 per cent due to its successful iron ore project in the Republic of Congo.
However, RCR iron ore analyst Trent Allen said he did not know if steelmakers would be able to absorb another price rise when the September iron ore contracts are set.
The spot market for iron ore fines imported to China reached a record high US$191.90/t in March due to anticipated ore shortages but later fell to US$175.92/t.
"The prices per tonne of some finished materials are below pre-GFC (global financial crisis) highs," Mr Allen said, citing hot rolled coil, which was s US$723/t, down 30.7 per cent on its July 2008 price.
Mr Allen forecast a contract price fall of five per cent for iron ore fines due partly to China boosting its own iron ore production.
"Even if this occurs, most of the current and prospective iron ore producers can still expect strong profit margins in the mid-term, excluding the risk of an unexpected stall for the Chinese economy," he said.
The 53 per cent share price rise for juniors and mid tiers takes into account a five per cent dive in stocks since the Japanese earthquake, and reflects the booming price for iron ore.
Iron ore contract prices in the Pilbara increased 20 per cent for the current June quarter to about US$170 a tonne at 62 per cent Fe (iron).
"In the meantime, China is boosting internal ore production and investing globally in iron ore projects, as an alternative to paying high import prices," Mr Allen said.
The urbanisation of China and India was ongoing and should drive reasonable growth in the iron ore and steel markets for the foreseeable future, he said.
Australia and Brazil dominate global iron ore pricing but west Africa is emerging as a significant new region.
The share price of 48 Canadian listed iron ore stocks had performed even more strongly, gaining 73 per cent over the same 12 months, the RCR report said.
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