Global resources BHP Billiton moved to a three-month high on Friday on speculation about the level of 2005/06 iron-ore settlements, brokers said.
Earlier on Friday, BHP Billiton touched R70,30, the highest level for the stock since October 13 last year. At 12.40pm, the group was quoted at R70, up R1,20 or 1,7% from the stock’s previous close.
On October 11 2004, BHP reached an all-time high of R73,45.
On the iron-ore front, a report said Rio Tinto has asked Japan’s largest steel producer, Nippon Steel, to pay 50% more for iron ore than before.
Very strong demand from China, which is the world’s largest consumer and producer of steel, has resulted in a tremendous shortage of iron ore, with the world’s iron-ore producers increasing output — but this increase in supply will take some time to meet demand.
For the 2004/05 year, iron-ore contract prices rose by 18,62%, which was the highest increase since 1980, and, in the previous marketing year, contract prices rose 9%.
Kumba on a high too
Meanwhile, shares in South African diversified mining group Kumba Resources on Friday climbed to a two-and-half-year high on the strong prospects for iron-ore contract prices.
In early trade, Kumba — the world’s fourth-largest deep-sea exporter of iron ore — touched R51, its highest level since June 12 2002. At 10.05am, Kumba was still quoted at R51, which was up 1,8% or 90 cents from the Thursday close.
“Kumba is up on the talk about the iron ore-settlements … Market expectations, about how much iron-ore settlements will be, have raised from the mid-teens late last year to about 30% currently and these increased expectations are being factored into Kumba’s [share price],” a Johannesburg analyst said.
The expected increase in iron-ore contract prices comes close on the heels of coal settlements, between the major producers and Asian consumers, with the settlements being double those of the previous year.
Both iron ore and coal are important raw materials in the production of steel. — I-Net Bridge