BHP is sticking to 37% iron ore output growth for 2014
Iron ore on Thursday gave up a fraction to continue trading on either side of $120 a tonne for a second week – a psychologically important level and a benchmark price for a healthy industry.
Today's import price for 62% fines at China's Tianjin port of $121.40 is also a 40% improvement since the commodity sunk to a three-and-a-half year low of $86.70 in September.
Iron ore's recovery to triple digits is attributed to high cost mines – more specifically those in China – which become unprofitable when the price stays low for too long. Supply is cut and prices return to these sort of levels.
China Daily reports while number three iron ore producer BHP Billiton has cut back on large expansion projects like the Outer Harbour terminal, conditions have improved to such an extent that scheduled capacity increases and output will remain on track.
Marcus Randolph, chief of the giant miner's ferrous and coal division, has assured that the company will not be reducing its annual iron ore production target this year, despite declining demand in China which consumes 60% of the seaborne iron ore trade.
BHP said its 2012 iron ore production will exceed 160 million tonnes. The company's iron ore production for its 2014-2015 fiscal year is expected to be around 220 million tonnes.
Randolph added that BHP's Western Australia iron ore projects are on track and meeting budget targets and the Anglo-Australian company will review its investment plans after 2015.