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IRON WILLED

19th September 2014

By: Darlene Creamer

  

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Iron-ore prices may stay at lows of $70/t to 80/t for as long as three years, former BHP Billiton executive Alberto Calderon warns, and fund adviser Liberum cautions that fourth-quarter supply restock is unlikely to lift prices as in prior years. Calderon suggests that iron-ore producers are heading for a cliff, and Liberum expects demand growth in China to be half of what it was in 2012 – but supply growth to be 160% higher. Iron-ore prices have plunged 38% to five-year lows this year, largely as a result of large volumes of Australian and Brazilian ore causing the price to fall further and faster than expected. Rio Tinto expects miners worldwide to cut 125-million tons of iron-ore capacity in 2014, roughly equal to the amount of new supply due to come on stream from Australia and Brazil.

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