iron ore prices, page-2

This one is two weeks old but still worth a read



The benchmark iron ore price finally snapped a 14-day losing streak, with today's modest rise potentially marking a turning point the beaten-down sector.

After hitting a multi-year low of $US115 per tonne yesterday, the benchmark iron ore price rose to $US117 per tonne today, ending a horror fortnight in which the commodity slipped about 13 per cent.

Today's rise will embolden analysts who believe there is a “floor” in the iron ore price between $US110 and $US120 a tonne.

That floor is thought to be set by high-cost Chinese iron ore producers, which supply about 30 per cent of China's iron ore demand. China is the main customer for Australia's commodity exports, especially iron ore.

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Most Australian companies and investors have long believed such a floor exists, and their investments would be vulnerable if the floor was proven to be a myth.

Fortescue Metals Group was singled out last week as a company whose debt profile was vulnerable should the iron ore price settle below $US115 per tonne for the next 18 months.

Fortescue shares today gained 2 cents, or 0.5 per cent today, to $4.15.

If the iron ore price rebound is sustained in coming days, it will be bad news for notorious American short-seller Jim Chanos. Mr Chanos has inspired a wave of pessimism towards Fortescue based on the notion the company's finances are fragile should iron ore prices retreat below $US100 per tonne.

A similar iron ore price slide last October also came to a halt at $US116 per tonne, after which prices begin to pick up


Read more: http://www.smh.com.au/business/iron-ore-prices-finally-break-losing-streak-20120801-23fac.html#ixzz23fJGHMWM