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June 20 (Bloomberg) -- Iron-ore prices have bottomed and will recover toward the end of this year as Chinese steelmakers increase output, according to Hebei Iron & Steel Co., the country’s largest producer of the metal by volume.

Benchmark China-bound iron ore prices will climb as high as $140 a metric ton in the second half, said Tian Zejun, president of Hebei’s international trading unit. Iron ore for delivery in the Chinese port of Tianjin has dropped 24 percent to $120.60 since reaching a 2013 peak in February, data from The Steel Index show.

“By the end of this year iron ore should be quite stabilized,” Tian said in an interview through an interpreter in Vancouver today. “After that, it should move to a higher price because Chinese steel production will continue to expand.”

Prices have gained in recent weeks as buyers sought to replenish inventories, said Tian, who oversees annual iron ore purchases of about 50 million metric tons for the Shijiazhuang, Hebei province-based steelmaker. Still, any rally this year will be moderate because of ample supplies and limited increases in steel prices, he said.

“From the supply side of iron ore, we can see there will be no shortages,” he said. “Iron-ore prices are not going to go crazy high.”

Tian was in Vancouver for the annual shareholder meeting of Alderon Iron Ore Corp., a Canadian mine development company in which Hebei owns a 20 percent stake.

Hebei made 71.1 million tons of steel in 2011, the most after Luxembourg-based ArcelorMittal, the world’s biggest producer, according to data compiled by Bloomberg.

To contact the reporter on this story: Christopher Donville in Vancouver at

To contact the editor responsible for this story: Simon Casey at

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