Right here in the clear light of day we can see that iron ore prices are likely to go up by at least 20% in next April’s annual contract negotiations between the big three (RIO, BHP, CVRD) and Chinese steel producers.
Heck, nickel was up 10% yesterday and zinc was up 5%. These are real assets with real demand.
“BHP Billiton (ASX:BHP) Ltd., the third-biggest nickel producer, said it’s opening mines and boosting exploration in countries including Indonesia, the Philippines, Russia and Guatemala on rising demand for the metal used in stainless steel,” reports Brett Foley in Bloomberg today. The share price closed at AU$40.44 yesterday, a 52-week high for the company.
Backed by high base metals prices, the company is ramping up exploration. In Outstanding Investments, we call it The Big Dig., but prefer the mid-level tier of base metals producers rather than the more obvious resource blue chips. Mining services companies are also worth a very close look.
Markets and Money