Fortescue Metals Group Ltd., 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, chairman 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 Inc. Tuesday upgraded its iron ore price forecasts by as much as 21 percent 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 urbanization, China, has still a very long way to go.”
The Bloomberg Commodity Index, which tracks returns from 22 raw materials, closed on Monday 21 percent above its low on Jan. 20, meeting the common definition of a bull market. The gauge is still almost 50 percent lower than a 2011 peak. Iron ore rose 2.8 percent to $52.54 a metric ton Tuesday bringing this year’s gain to 21 percent.
In contrast, the World Bank Tuesday cut its outlook for global growth as business spending sags in advanced economies including the U.S., while commodity exporters in emerging markets struggle to adjust to low prices.