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Stable iron ore price a boon for miners

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Australia’s iron ore miners have added over $65 billion to their value over the last financial year as the crash in iron prices failed to materialise.

The upswing comes as iron ore fetches above $US130, defying predictions a fall would once again hurt the industry.

The shares of iron miners have jumped as a result, with both big-ticket companies and medium producers reaping the rewards.

The Australian reports that Mount Gibson Iron is up 111% since June 30, Arrium has climbed 93% and Fortescue Metals Group has risen 92%.

While BHP is up 21 per cent, or $33 billion, and Rio is up 25 per cent, or $21.7 billion.

The continuing strength of the steelmaking ingredient comes as the slowing demand from China usually seen at this time of the year has failed to come into play.

"China has been restocking after record levels of iron ore imports over the past few months," Deutsche Bank strategist Xiao Fu said.

"We expect the pace of restocking could slow. However, we are still below the 2011-12 (inventory) peaks, which suggests that the restocking cycle could last for another two or three months."

The demand revival follows a report by the World Steel Association which showed global steel production rose to 133 million tonnes in September, a 6.1 per cent jump on last year’s numbers.

However, predictions by some analysts suggest what goes up must come down, with expectations iron ore prices will dip to $US115 by the end of the year, and as low as $US90 by the end of 2014.

"We hold the view that prices will move lower over the coming weeks as incrementally growing supply, against strong but not immediately rising demand, gradually loosens the short-term market balance," Credit Suisse said.

"Iron ore's tendency to overshoot, when declining prices leave consumers unwilling to risk catching a falling knife, means the possibility of more dramatic price action cannot be completely discarded," the bank said.

For now, with prices up, getting product extracted and exported is key and Port Hedland is doing a raging trade, recording a 10 per cent rise in exports for October.

Exports rose to 25.2 million metric tonnes from 22.97 million tonnes in September and 17.63 million tons in October 2012, Port Hedland Authority said.

Major miners like BHP, Fortescue, and Atlas use Port Hedland to export their products, making it one of the world’s largest iron-ore terminals.

Total export volumes of iron ore are estimated to have jumped by 16 per cent in 2013.

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