Bloomberg quoted Goldman Sachs JBWere Private said that cash prices for iron ore will bottom this quarter as demand from China rebounds, boosting forecast earnings for BHP Billiton Limited and Rio Tinto Group.
Mr Malcolm Southwood and Mr Paul Gray analysts of Goldman Sachs JBWere said that “We now believe that the current quarter will mark the bottom of the price cycle for spot iron ore. Implied prices from Australia will average USD 52 tonnes this quarter, from USD 71 last quarter and rise to USD 53 in the following three months.
The report said that producers in Australia will benefit from the rebound as the amount of ore sold at spot prices gains amid stalled contract price talks with steel mills. Increased spot sales may boost Rio earnings 4.1% in 2009 as imports displace higher cost output in China.
The analysts said that imports of ore into China will rise by 40 million tonnes this year and Australian producers may supply 75% of the increased demand.