Murchison strong on back of Chinese demand

Murchison Metals has joined other iron ore miners in reporting strong results for the December quarter and remains positive for 2010.

Murchison Metals has joined other iron ore miners in reporting strong results for the December quarter.

The company announced it made nine shipments carrying a record total of 499,328 tonnes of ore during the quarter.

Murchison also shipped 134,927 tonnes of fines iron ore from its operations in Western Australia’s midwest region during the quarter, up from 47,147 tonnes in the September quarter.

The strong numbers can be attributed to the resurgence of demand from China, the company said.

“With Chinese steel production continuing to grow, demand for iron ore remains robust,” it said.

Imports of iron ore into China in the December quarter were the second highest on record, at 62.2 million tonnes.

The strong Chinese demand has also had a major effect on iron ore spot prices, which at around US$125 to US$135 per tonne are approximately double the settlement price reached with Japanese steel mills for 2009.

“Although demand is recovering more gradually outside of China, the positive overall trend globally has tightened the supply-demand balance and significantly boosted spot prices,” Murchison said.

“Given the strong market fundamentals, many analysts have again increased predictions for iron ore prices in the new benchmark settlement for 2010, with expectations mostly in the range of a 30% to 40% increase, and as high as 50% more than the 2009 benchmark price.”

The company also announced it is in a very positive financial position, saying that it was debt free and had cash and liquid investments of $102.4 million.

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