NEW YORK, NY -- (Marketwire) -- 06/11/12 -- Iron ore producers have struggled as a slowdown in the Chinese economy was expected to dampen demand for the commodity. Iron ore prices look to rebound from six-month lows as China has recently approved approximately $23 billion in steel projects. The China Iron and Steel Association on May 29 stated that steel production in China could reach 700 million tons in 2012. The Paragon Report examines investing opportunities in the Iron Ore Industry and provides equity research on Cliffs Natural Resources Inc. (NYSE: CLF) and Vale (NYSE: VALE).
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According to analysts' estimates collected by Bloomberg prices for the commodity in the second half will rise to $152 a metric ton. Prices earlier this week fell to $130.60, close to the year's low seen on May 23 numbers from The Steel Index Ltd. showed. New plants for Baosteel Group Corp. and Wuhan Iron & Steel Group were among the projects approved by China's main planning agency.
"Commodity prices are already close to the bottom and are set to rebound," Henry Liu, analyst at Mirae Assets Securities Co., stated by telephone according to Bloomberg News. "Prices will get a boost in the short term on speculation China will stimulate the economy. Real demand for steel depends on what incentives the government gives to drive investments."
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Cliffs Natural Resources is an international mining and natural resources company. The company is a major global iron ore producer and a significant producer of high- and low-volatile metallurgical coal. Cliffs' strategy is to continually achieve greater scale and diversification in the mining industry through a focus on serving the world's largest and fastest growing steel markets. First-quarter 2012 Asia Pacific iron ore sales volume increased 25 percent to a record 2.8 million tons from 2.2 million tons in 2011's comparable quarter.
Vale is the second biggest mining company in the world and the largest in the Americas. They are the leading producer of iron ore and pellets and the second biggest nickel producer. Vale along with BHP, and Rio Tinto control roughly 67 percent of the seaborne trade of iron ore according to Bloomberg Industries. Vale recently announced plans to sell its thermal coal operation in Columbia.
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