April 22 (Bloomberg) -- Fortescue Metals Group Ltd., Australia’s third-biggest iron ore exporter, said “very low” ore stocks will keep the price of the steelmaking material at $139 to $140 a metric ton in the short term.
Steel demand and production in China, the biggest consumer, will remain balanced at about 2.1 million tons to 2.2 million tons a day, because inventory remains relatively high even as iron ore stocks are low, which may result in some “minor” correction in steel output, Chief Executive Officer Neville Power said yesterday in an interview with the Australian Broadcasting Corp.’s ‘Inside Business’ program.
“China looks very strong going forward and we’ve got renewed confidence in the continued industrialization and urbanization growth in China,” he said.
China’s economy is expanding at between 7.5 percent and 8 percent a year, underpinning demand and continued growth in China’s steel industry, Power said. Iron ore may trade between $120 to $130 a ton in the longer term, he said.
“We will have some fluctuations around that and in the short term I see this sort of price level of $139, $140 a ton continuing because there are very low iron ore stocks,” Power said.
Iron ore last traded on April 19 at $138 a ton, according to data compiled by The Steel Index Ltd.
Fortescue shares climbed 9.9 percent to A$3.77 at the close of Sydney trading on April 19, giving the Perth-based company a market value of A$11.7 billion ($12 billion).
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