Kumba Shares Plunge After Australian Iron-Ore Forecast

Kumba Iron Ore Ltd. declined after Australia, the world’s biggest iron-ore exporter, cut its price forecast for the steel raw-material as slowing economic growth in China, the largest buyer, curbs demand.

Shares in Africa’s biggest producer of the metal ore dropped as much as 5 percent, the biggest intraday fall since March 12, to 545.05 rand, before closing 3.3 percent down at 555.30 rand in Johannesburg. The company, which has a market value of 177 billion rand ($21 billion) is controlled by London- based Anglo American Plc. (AAL)

The steelmaking ingredient will average $136 a metric ton in 2012, the Bureau of Resources and Energy Economics said in a report today. That compares with $140 estimated by the Canberra- based bureau in March and an average of $153 last year. Kumba exported more than 60 percent of its ore to China last year, according to data compiled by Bloomberg.

“China is Kumba’s major exporting partner right now and will remain a key driver until demand from other countries like India picks up,” said Clinton Duncan, a resources analyst at Johannesburg’s Avior Research Ltd.

Slow Pace

Prices dropped 2.2 percent this year as the Chinese economy expands at the slowest pace since 2009 and Europe’s debt crisis threatens global growth. BHP Billiton Ltd. (BHP), the biggest mining company, said on June 6 that the European debt crisis and spreading economic uncertainty will affect demand for commodities.

China may expand 8.2 percent in 2012, compared with 9.2 percent last year, according to the median forecast of 15 economists surveyed by Bloomberg this month. The nation’s gross domestic product growth slowed for a fifth quarter to 8.1 percent in the first three months, government data showed.

“There has been a slowdown and prices have come back with that change in momentum,” said David Lennox, a resource analyst at Fat Prophets in Sydney. “The outlook for China is slowing, but they still do require significant iron ore.”

To contact the reporters on this story: Stephen Gunnion in Johannesburg at sgunnion@bloomberg.net;

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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