Fortescue Metals Group CEO Nev Power has played down fears over falling demand for iron ore, and says prices for the key commodity won't fall under $US120 a tonne for the foreseeable future.
In an interview on Inside Business Power said the iron ore price was expected to range between $US139 and $US140 a tonne for the short term, moving to $US120-$US130 a tonne in the future.
“We will have some fluctuations and in the short term I see this sort of price level of $US139, $US140 a tonne continuing because there are very low iron ore stocks,” he said.
Power also said while steel stocks in China were quite high demand for iron ore would be buoyed by the relatively low ore stockpiles currently held by steel-makers.
“While there is some potential for a correction in steel production, it would only be minor and supply/demand balance is there in iron ore so there aren't the same factors that would create any significant drop in the iron ore price,” he said.
Despite Power's confidence in future demand, FMG has worked hard to cut jobs, lower costs, and refinance debt since iron ore prices hit a low of around $US86 a tonne last year.
Most recently the company said it was on track to sell a stake in its port and rail assets by the middle of this year.
Exact details of the proposed infrastructure deal have not been made public but the sale could fetch FMG up to $5 billion.