NEW YORK, NY--(Marketwire -08/03/12)- The recent economic slowdown in China, the world's largest steel producer, have seen prices for iron ore hit two and a half year lows. Prices for the commodity are approximately $50 - $60 per ton cheaper when compared to the same period last year. "Iron ore prices could go into free-fall until end-user demand for steel picks up in the autumn," said Rafael Halpin, China analyst with the UK consultancy MEPS. The Paragon Report examines investing opportunities in the Iron Ore Industry and provides equity research on BHP Billiton Ltd. (BHP) and Cliffs Natural Resources Inc. (CLF).
The China Iron and Steel Association recently reported that the countries steel companies saw profits plummet 95.8 percent year-over-year during the first half of 2012. Aggregate profit for steel companies totaled 2.39 billion Yuan ($376 million), while companies who were in the red saw a total loss of 14.25 billion Yuan.
"The profitability of the industry is on the verge of becoming a deficit," said Zhang Changfu, association vice-chairman. "Production capacities are increasing in the current oversupply market while investment is growing, which will make the glut worse."
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BHP Billiton Iron Ore is one of the world's leading iron ore producers with operations in Australia and Brazil. They sell lump and fine product from Australia and iron ore pellets from their Samarco operation in Brazil. The company recently reported that Western Australia Iron Ore shipments rose to a record annualized rate of 179 million tons in the June 2012 quarter.
Cliffs Natural Resources is a major global iron ore producer and a significant producer of high- and low-volatile metallurgical coal. In their second quarter 2012 results release the company maintained its 2012 U.S. Iron Ore sales and production volume expectations of approximately 23 million tons and 22 million tons, respectively.
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