iron ore rebound, page-8

Many commodity analysts are predicting a positive year for mining companies with the price of iron ore set to stabilise at relatively high levels.

The price of the steel making ingredient is currently around $US145 a tonne.

That may be well down on the $US190 it traded for almost two years ago, but it is much better than the $US87 a tonne it plunged to in September.

ANZ's head of commodities Mark Pervan says the price has risen as a recovery takes hold in the Chinese economy.

He expects are fairly buoyant year for iron ore producers as that momentum continues.

"If it can sustain these gains, what it does is allow investors to think about more sustainability around expansion plans and profit growth," he observed.

"So, at these levels, the margin ability in the iron ore industry is going to be very, very strong, so it will be a good outlook for the iron ore and bulk producers."

Mr Pervan says the price of iron ore is unlikely to plunge back to the levels it hit last September now that there is more optimism about China's economy, and should continue trading near current prices.

"China was manufacturing a slow down and of course they had the leadership change over. All of those sort of factors are passing so the leadership change over I think brings in a little more optimism," he added.

"I think they'll look to reignite a bit of growth next year, albeit it'll be a steady outlook.

"On balance, the global market will be more encouraging than it was last year, so fundamentally better conditions this year than there were last year."