Fortescue chairperson Andrew Forrest
PERTH – Fortescue Metals Group, the world’s fourth-largest iron-ore exporter, is starting to see signs of the next wave of global economic growth that may help support demand for the steelmaking ingredient.
“I have just come back from a major trip through Europe and North America and Asia and I’m not seeing industries looking crippled,” Andrew Forrest, chairperson of the Perth-based company, told reporters Wednesday after a mining conference in Perth. “I’m seeing industries looking strong.”
Commodities this week entered a bull market, ending a five-year rout, as supply constraints drive up prices in everything from soybeans to zinc. Citigroup on Tuesday upgraded its iron-ore price forecasts by as much as 21% saying there is a high probability that China will maintain short-term stimulus, boosting demand for steel.
“I want to declare loudly and clearly that the mining industry is neither dead nor in a negative transition,” Forrest said earlier today in a speech at the conference.
“You can see the strength in share prices recovering, you can see it in demand beginning to build again. The growth engine of urbanisation, China, has still a very long way to go.”
The Bloomberg Commodity Index, which tracks returns from 22 raw materials, closed on Monday 21% above its low on January 20, meeting the common definition of a bull market. The gauge is still almost 50% lower than a 2011 peak. Iron-ore rose 2.8% to $52.54 a metric ton Tuesday bringing this year’s gain to 21%.
In contrast, the World Bank Tuesday cut its outlook for global growth as business spending sags in advanced economies including the US, while commodity exporters in emerging markets struggle to adjust to low prices.