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The latest iron ore price hike was 97%… and there is much more to come in the future.

Commodity prices have been on an upward spiral for years - and iron ore prices have been leading the charge. The price shows no sign of easing - in fact most industry players expect it to rise even further.

Iron ore prices have risen by nearly 400% since 2001 - and the latest deal has seen prices almost double.

Rio Tinto (NYSE: RTP), the world’s second-largest exporter of iron ore, revealed yesterday that it had secured price increases of as much as 97% from Asian steelmakers.

This was its latest summary on pricing after announcing a deal with other Chinese steel mills last week. There’s even talk that BHP Billiton (NYSE: BHP) is holding out in its own negotiations to secure an even better price than the one achieved by Rio.

And it’s not just China and India driving the demand. On Tuesday, the Japanese government said that steel demand there would hit a 35-year high this year.

Prices are expected to continue to rise. Citigroup (NYSE: C) reckons that “the iron ore market remains under-supplied and only a sharp deceleration in Chinese steel production will change this. We expect iron ore to rise by 30% in 2009… but this may be conservative.”

One company looks set to profit from this trend big time - the company has 2.7 billion metric tons of iron ore and is located right on the border with China.

The problem for China’s ravenous steel mills has been the fact that the country’s ore grades are pretty poor. This means that the ore has to be shipped from South America and Australia to manufacture the steel needed for its ambitious building plans. It’s much better to get raw materials from right on its doorstep.

The current iron ore freight rate from Australia (BHP/Rio Tinto) to China is around $50 per tonne. The cost to move ore from Brazil (Vale) to China stands at around $100 per tonne. This group could potentially slash it to $5 a tonne.

Broker Cannacord Adams recently reviewed all of the company’s projects. They concluded their net asset per share valuation is DOUBLE the current share price.

But I reckon that’s a pretty conservative forecast.

As you can probably tell, I’m pretty fired up about this opportunity.

I believe it has real potential to double your money if all goes to plan.

That’s why it takes centre stage in the latest issue of my Smart Commodities UK advisory.

And all you have to do to get ALL the juicy details is agree to review Smart Commodities UK for three months - with absolutely no commitment required at all.

On signing up for your three month trial you’ll immediately receive an email from me. It’ll include a link to a welcome pack containing five of my core ‘must buy’ resource-based portfolio stocks.

Soon after that you will receive the latest edition, by post, with all the details of the unique company I’ve talked about today.

All you need to do, to get in on this stock… is become a regular Smart Commodities UK reader…Read more about this exciting iron ore story here.

Regards,

Garry White
Editor
Smart Commodities UK

Source: Invest in the ‘Hottest’ Commodity Around

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About the Author

Garry White is the editor of financial newsletters Garry Writes and Outstanding Investments UK.

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