Outlook for iron ore prices

ANZ Banking Group’s (ASX:ANZ) Chief Economist Warren Hogan tells FNN iron ore prices look set to soften yet maintain elevated levels, amid reportsnew supply from Africa could hit the price of iron ore. The World Steel Associationposts growth in global iron ore production in March.
 
Company News
Forrest affirms robust iron ore demand
Fortescue Metals Group Limited’s (ASX:FMG) founder and chairman Andrew Forrest has affirmed the demand for iron ore remains robust. The comments come after reports emerged last week that renowned American hedge fund manager Jim Chanos had labelled Fortescue a ''value trap'' stock. Responding to the reports Mr Forrest says the iron ore price mayfall to as low as $US90, but investors should not be surprised to see prices trade at more $US100 over the next five to 10 years. Fortescue is currently undertaking a ramp up to nearly triple production to 155 million tonnes per annum by 2013.
 
Atlas on track to meet FY output
Iron ore producer Atlas Iron Limited (ASX:AGO) says it’s on track to meetits full year production forecast of up to 5.7 million tonnes. Releasing its third quarter results Atlas revealed its shipments had fallen 13 per cent to 1.2 million tonnes as its operations took a hit from tropical cyclones. Atlas also mapped out plans to inject and extra $630 million into its Pilbara expansion as it strives to double iron ore export capacity to benefit from rising demand from China. Atlas has affirmed it expects the price of iron ore to remain strong and that it will continue to pay its shareholders dividends.
 
QR eyes Pilbara rail link with Atlas
Australia’s largest rail freight company QR National (ASX:QRN) is evaluating the possibility of constructing and completing a railway to connect iron ore mines in the East Pilbara to Port Hedland in Western Australia. QR has inked a deal with Atlas Iron Limited (ASX:AGO) to jointly study a proposal to service iron ore deposits of Atlas and other miners.
 
Newcrest cuts FY production guidance again
Gold and copper miner Newcrest Mining Limited (ASX:NCM) has again cut its full year production guidance, blaming heavy rains, higher cost inflation, a stronger local currency and lower labour productivity. The miner now expects to deliver 2.25-2.35 million ounces of gold for the full 2012 financial year.

Resources News
New African supply to hit iron ore price
New supply of iron ore from Africa could hit the price of the steel making commodity by as much as $US70 per tonne over the next seven years. A report made in conjunction with the Federal Department of Resources, Energy and Tourism and Australian National University economist Luke Hurst has forecast the price of iron ore, that now sits at about $US150 per tonne, is expected to pull back to $US80 per tonne as greater African capacity comes on stream.
 
Global steel production grows
The World Steel Associationsaysglobal steel production rose 1.8 per cent to 123 million tonnes in March, from the 62 countries reporting to the association. North America’s quarterly crude steel production grew by 6.7 per cent, Asia’s was up 1.5 per cent, while Europe’s fell 3.9 per cent in the first three months of 2012. In the same period China’s steel production increased to a record of 3.6 per cent.
 
Miners dominate overseas investment
Australia’s miners received more than 31 per cent of total foreign investment in 2010-11. According to the Foreign Investment Review Board’s annual report, of the $177 billion of investment that was approved the resources sector dominated, followed by the services and real estate industries. America was the number one investor, injecting $27.6 billion into Australian projects, followed by Britain, China, Canada and India.
 
WA takes top spot
CommSec's quarterly "State of the States" report has shown Western Australia is the nation’s best-performing economy and is expected to remain so. Chief economist Craig James says the mining state’s economic growth is so strong, “When discussing the Australian economy it is best to focus on two concepts: total Australia, and Australia excluding Western Australia." 
 
FNN Interview
FNN spoke to ANZ Banking Group’s (ASX:ANZ) Chief Economist Warren Hogan about his outlook for Chinese growth and commodities in 2012.
 
Despite China’s growth drop to near a three year low of 8.1 per cent in the first quarter, the bank maintains an optimistic view on the nation’s growth and forecasts a pick up toward the end of the year. 
 
ANZ believes the commodity boom will hold for a number of years to come but warns, “There will be a lot of volatility around that and there will also be a lot of different performances from different classes of commodities”.
 
ANZ is most positive on precious metals and energy, believing oil and gold will do well, but believes iron ore prices and coal could see “some sort of modest downward movement” over the next 12 months.
 
To watch more of the interview click here 

-Lelde Smits