ladies and gents to all MMX holders this article may interests...

ladies and gents
to all MMX holders
this article may interests you re FE ore prices
I hold MMX
Iron ore tipped for 25pc price hike
Kevin Andrusiak
July 11, 2007

IRON ore prices are tipped to jump a further 25 per cent next year, joining heady gains for coal exporters and powering the resources boom and the share market.
According to new research by investment bank UBS, iron ore prices will jump a further 25 per cent from April 1 next year and will help lift the earnings of major producers Rio Tinto and BHP Billiton by 22 per cent and 10 per cent respectively.

UBS forecasts that the BHP and Rio share prices will jump from $38 and $103 respectively to $45 and $118 based on continued tightening of supply for bulk commodities such as iron ore and coal in a strong hint that the resources boom will roll on.

"Given the upgrades to iron ore, copper and molybdenum, Rio Tinto is the bigger beneficiary in terms of earnings changes," UBS said. "Following our upgrades, Rio is now trading at a discount to BHP on a price/earnings basis. With Rio the first to report earnings, we believe one could see relative performance swing back towards Rio in expectation of capital management."

Iron ore prices last fell in 2002. On UBS's predictions, the price of iron ore fines will lift to $US101 a tonne next year and $US111 a tonne in 2009.

Attempts by Chinese authorities to slow economic growth as its domestic iron ore industry grapples with grade problems has had only minimal effect.

Global steel production has outpaced market predictions and is up 3.8 per cent for the first five months of the year, compared with the corresponding period in 2006, as Chinese imports of iron ore are up 21 per cent compared with the first six months of 2006.

While the major producers are reticent to comment on future price expectations for iron ore - contract prices are negotiated with steel mills on an annual basis - BHP Billiton Iron Ore president Ian Ashby said in March that smaller producers did not have the capacity to dramatically affect the supply-demand imbalance.

Both BHP and Rio are racing to increase capacity at their Pilbara operations while a host of others, led by Andrew Forrest's Fortescue Metals Group, have also tried to crash the party.

Analysts at JP Morgan yesterday also upgraded the bank's share price targets for BHP and Rio to $40 and $120 per share.

JP Morgan did not change its iron ore price forecast of a 10 per cent increase from April 1 next year before a retraction of 15 per cent in 2010.

However, it has upgraded its thermal coal price forecasts by 11per cent from April 1 and a further 7.5 per cent increase in 2009. JP Morgan also expects coking coal prices to lift 24 per cent in 2008 to $US105 a tonne before a pull-back to $US100 a tonne the following year.

"Earnings (for BHP and Rio) have been increased by higher base metal and coal prices in particular but the increase has been dampened by the stronger Australian dollar and South African rand," JP Morgan said.

Meanwhile, the uranium price continues its recent downward run and has fallen for the second consecutive week, the first time since May 2001, to $US133 a pound. UBS expects the uranium spot market to hit $US200 a pound next year before declining.