Iron ore prices now “less of a boys club”

Recent falls in iron ore prices are unlikely to worry Pilbara miners and changes in the market have made resources prices "less of a boys club," according to a Sydney analyst.

Fat Prophets analyst David Lennox told Australian Mining while iron ore prices had weakened recently they were still in a comfortable range for mining companies.

"Obviously like all people they would like the price to be higher but I think that it's within their comfort zone," he said.

"They certainly wouldn’t like to see it drop out of triple figures, put it that way."

Lennox said iron ore prices were likely to level out around $US120 a tonne, which still represented a significant profit margin for mining companies BHP Billiton, Rio Tinto, and Fortescue Metals Group.

But he said the recent dent in the market likely caught miners off-guard.

"I suspect that they'd probably be a little surprised because remember not so long ago we had contracted prices and these falls probably wouldn’t have happened," he said.

"It's fairly new to all of us what the prices will do now that there's less of a boys club pricing mechanism and there are more participants in the market."

Between April and July the iron ore price weakened from $US147 to $US127, and has slipped as low as $US116 this month.

Lennox told Australian Mining while the initial rush for iron ore was starting to level out demand from China was not declining.

He said temporary spare capacity in the Asian superpower's steel consumption was behind recent falls, but underlying demand would remain for years to come.

Image: Iron ore prices January-July, courtesy indexmundi

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