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Reports: Chinese steel giant says iron ore market is in a ‘bubble’

“Everyone who has money is rushing to invest in iron ore,” Baosteel Group chairman, Xu Lejiang said on Friday, warning that supply may outstrip demand “sooner than expected” pushing prices down in the process.

Brazil’s Vale — the world’s number one iron ore producer — and Australian heavyweights BHP and Rio Tinto have some $45bn slated for new mines. The cash price of 62%-iron ore shipped to China’s Tianjin port has almost tripled from Nov. 21, 2008 when data became available, according to the Steel Index.

Bloomberg reports:

“Global exports of iron ore may gain 28 percent to 1.4 billion metric tons by 2016, the Australian Bureau of Agricultural and Resource Economics and Sciences has forecast.”

The Australian Herald Sun reports:

“Mr Xu yesterday said Baosteel was “very interested” in taking part in Rio and Chinalco’s planned $US10 billion development of the huge Simandou deposit in Guinea.”

Charts from Indexmundi shows iron ore prices are up over 20% over the last six months.