iron ore price, page-3

Australia's Fortescue CEO sees little change in iron ore prices for 2014
Melbourne (Platts)--19Feb2014/1233 am EST/533 GMT

Fortescue Metals Group CEO Nev Power does not expect any dramatic change in iron ore prices due to new supply coming into the seaborne market this year, he said Wednesday during a conference call on the company's financial results for July-December 2013, the first half of the Australian fiscal year.

Iron ore prices would average $110-120/mt CFR in 2014, albeit with periods of volatility as Chinese mills and traders stock up and destock, he added.

Much of the new supply from miners in Western Australia had already hit the market and been easily absorbed by China, which imported 820 million mt of iron ore last year, up 10% year on year, Power said, adding: "We continue to see strong demand from our customers."

His comments were in contrast to those made by BHP Billiton CEO Andrew Mackenzie on Tuesday, who said he expected iron ore prices to fall this year as new supply comes on stream. Rio Tinto CEO Sam Walsh had expressed a similar view to consulting company Mackenzie previously.

However, Power said seaborne supply would displace expensive Chinese iron ore production, but added that he believed there was still "quite a bit of buffer" in the iron ore supply-cost curve that would support prices.

There was a "strong focus" in China for the country's steel mills to improve their environmental performance, which has resulted in higher premiums for direct charge products such as lump and pellets, he said.

"We haven't seen any dramatic impact on buying behavior from mills, but we have taken the opportunity to sell more lump over the last quarter or two but do not expect the lumps/fine ratio to change much," Power said in reply to a question.

Fortescue's average realized price for iron ore over July-December was $124/dry mt CFR -- equivalent to 92% of the average Platts IODEX for 62% fines over that period. Its net profit after tax for July-December 2013 was $1.7 billion, up a hefty 260% from $478 million the previous year, due to a 51% lift in iron ore shipments to 53.9 million mt.

In response to a question on reports that the miner's ore had been subject to some discounts, Power said: "We don't disclose how we price our products; we track the market and price all of our products off the Platts index."

--Paul Bartholomew, [email protected] --Edited by E Shailaja Nair, [email protected]