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Cap Reaches Eight-Week High on Iron-Ore Recovery: Santiago Mover

Jan. 2 (Bloomberg) -- Cap SA, Chile’s largest iron-ore miner, rose to the highest in eight weeks on a recovery of prices in China for the raw material used to produce steel.

Cap advanced 4 percent to 16,693 pesos in Santiago, its highest closing price since Nov. 8. The Santiago-based company is also the country’s biggest steel producer.

“It’s all about iron-ore prices today,” Jose Manuel Edwards, an analyst at Santiago-based brokerage IM Trust SA, said in a telephone interview. “Iron mining now accounts for most of Cap’s gross profit as steel margins have fallen and iron prices have been recovering.”

The price of imported iron ore in the Chinese port of Tianjin has increased 25 percent in the past month to $144.90 a dry ton, according to The Steel Index Ltd. It fell to $86.70 on Sept. 5, the lowest since October 2009.

While iron-ore mining represented 53 percent of Cap’s revenue in the third quarter of 2012, with steel production at 44 percent, mining of iron ore accounted for 86 percent of gross profit versus 4 percent for steel, according to data compiled by Bloomberg.

Cap has gained 15 percent since reaching 14,560 pesos on Dec. 10, its lowest price in a year.

To contact the reporter on this story: Eduardo Thomson in Santiago at ethomson1@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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