Atlas Iron Ltd., the West Australian iron ore company that started mining last year, said China"s demand for the raw material is recovering and contract prices may not drop as much as anticipated.
Atlas Iron Ltd., the West Australian iron ore company that started mining last year, said China"s demand for the raw material is recovering and contract prices may not drop as much as anticipated. ?There is big destocking of the stockpiles in China and that is pushing people to go and replenish,? David Flanagan, chief executive of the Perth-based company said on Bloomberg Television today. ?We are seeing strengthening demand.?
Demand for the steelmaking raw material plunged last year, with prices for non-contract ore in China slumping 38 percent to 630 yuan ($92) a metric ton in the fourth quarter. Prices, up 7 percent this year after China announced a 4 trillion yuan stimulus program, remain below the record contract rate set last February and may fall at least 30 percent in negotiations this year, according to Evolution Securities in London.
?I don"t want to forecast a number specifically but I think 30 percent is over the top,? Flanagan said. ?The stimulus package is playing a role and general growth in China is also playing a role? in demand rebounding, Flanagan said.
Atlas declined 0.4 percent to A$1.395 at the 4:10 p.m. close on the Australian stock exchange. The shares have climbed 63 percent this year, after slumping 64 percent last year.
China"s iron ore imports rose 6.2 percent in December to 34.5 million tons, according to the Beijing-based customs office. Iron ore stockpiles at ports are falling, down to 60 million tons from 75 million tons, according to Merrill Lynch & Co.
Baosteel Group Corp., China"s biggest steelmaker, started annual iron ore contract talks with Rio Tinto Group on Jan. 12, according to two company executives. Discussions with Brazil"s Cia. Vale do Rio Doce, the world"s biggest producer of iron ore, and BHP Billiton Ltd. will start soon, they said.
Atlas today announced the initial resource for its Wodgina project of 8.1 million tons. The project is 100 kilometers (62 miles) from Port Hedland, Australia"s biggest export harbor for iron ore.