Iron ore supply shortfall may last another 5 years On India export curbs, uncertainly over China output
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Fortescue Metals Group Ltd, building a A$2.8 billion ($2.6 billion) iron ore operation, said a supply shortfall for the steelmaking raw material may remain for up to five years, helping to boost record prices for the ore.
Excess demand
''For the next three to five years there is certainly going to be an excess of demand over supply,'' Mr Christopher Catlow, Chief Financial Officer of Perth-based Fortescue, said on Thursday at an industry conference in Sydney. Restrictions on exports from India and uncertainty about future output from mines in China may restrict global supply, he said. Fortescue, which is headed by Australia's richest man, Mr Andrew Forrest, is on schedule to ship first ore from the mine to China in six weeks, he said. Prices have risen for six straight years to a record on increased demand from the Asian nation, the world's biggest consumer of the ore.
Forecast
''We forecast iron ore prices to remain above long-term trend prices for a further five years and, as an un-hedged producer, Fortescue Metals is levered to the forecast price strength in iron ore,'' Melbourne-based Morgan Stanley analyst Mr Craig Campbell, who started Fortescue coverage on Wednesday with an ''overweight'' rating and an A$8.39 price target, said in the initial report. Fortescue advanced 17 cents, or 2.5 per cent, to A$6.89 at the 4:10 p.m. Sydney time close on the Australian Stock Exchange. It was the best performer on Australia's benchmark index last year after rising more than fivefold. Forrest has a net worth of $6.5 billion, according to Forbes magazine.
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Source : Business
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