The world largest exporter, Australia, iron ore exports will likely rise by 17 percent in volume and 7 percent in price on 2012, that is an extra US$15 billion of revenue for the iron ore producers, little wonder FMG has paid off over US$1billion of debt early.
The demand has not dropped, and additional supply has come on slower than planned, a trend expected to continue into 2014. Longer-term, although most analysts are predicting a sub $100 a ton price point, it is difficult to factor the effects of this price on the high cost Chinese producers who pump 300Mt into the market at cost around US$110-$120 per ton.
For the moment, iron ore producers have their confidence back, with both BHPB and Rio recently announcing renewed expansion plans for their Pilbara operations. It may take longer for the capital markets to regain their interest in resource companies but 2014 is looking to improve on this year…from good to great.