SOURCE: Paragon Financial Limited
NEW YORK, NY--(Marketwire - Sep 20, 2012) - Iron ore producers earlier this year had experienced a downturn in Chinese demand after officials cut the country's 2012 target growth rate to 7.5 percent -- the lowest year-on-year growth projection in eight years. But recent plans from the Chinese government to help boost their struggling economy have sparked a rally in iron ore prices. The Paragon Report examines investing opportunities in the Iron Ore Industry and provides equity research on BHP Billiton Ltd. (NYSE: BHP) and Rio Tinto plc (NYSE: RIO).
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The Chinese government earlier this month approved plans to build over US$150 billion in infrastructure projects in an attempt to boost their struggling economy. Steel mills across China have increased their purchases for iron ore following the announcement. Last week, prices for the commodity at the Chinese port of Tianjin saw its biggest gain in nearly years after jumping 6.7 percent to $95 a metric ton, data from The Steel Index Ltd. has shown.
"China has shown its hand," Richard Lee, a Barclay's iron ore and dry-bulk trader, said by e-mail according to Bloomberg. "It intends to add a number of new projects and mills are now short, and therefore they are restocking."
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BHP Billiton Iron Ore is one of the world's leading iron ore producers with operations in Australia and Brazil. The company sells lump and fine product from Australia and iron ore pellets from their Samarco operation in Brazil. The company last month reported that net profit for the year ended June 30, 2012 declined 35 percent.
Rio Tinto's iron ore business is the second largest supplier to the iron ore market which makes steel for industrial and infrastructure use. In 2011 the company's iron ore business reported revenues of $29,909 million. Rio Tinto last month reported that the Phase one Pilbara iron ore expansion is on track for completion by end of 2013.
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