Lately it seems that merely hearing the words “iron ore” sends many investors into a frenzy. Because of the strong returns for this investment over the past few years, it seems that virtually all investors are considering this industry for their next “big trade”.
In truth prices have been paid for the iron ore needed for many products in the world even long before a piece of steel in developed into cables or kitchen pots and pans. There are however, a few things to keep in mind about the iron ore market if you are planning to get in on the action.
1. First you should know who the dominant global giants are. Currently Companhia Vale do Rio Doce, Rio Tinto and BHP Billiton are the dominant mining companies in the iron ore trade. Vale is currently the world’s largest producer of iron ore, putting out more than 82 million metric tons in just the first quarter of 2008. If you want to know the first secret in becoming successful in this trade then you should remember these names. Keep up with the current trends and know who is in the hot seat at all times.
2. Your second tip is to know the market environment. While record oil prices have continued to blast headlines around the world for the past few months, steel prices have risen 50 percent so far this year. Of course no one has really noticed steel prices with the constant state of flux that the world’s oil prices have been in. Knowing the market is crucial if you are planning to trade in any product.
3. Thirdly you need to understand why you should care about iron prices. When the price of iron ore increases, steel producers will definitely feel the pinch. They will ultimately pass the cost on in the form of surcharges. Make sure that you keep updated with the latest prices and understand how these prices will affect you in the trade.
4. Valuation is another tip that you should consider. Currently buyers are paying around 150 – $180 per Metric ton for Iron Ore fines depending upon the quantity and terms. Since the widely publicized Rio Tinto announcement prices have been moving higher daily.
Everyone stays busy these days and in doing so it is often easy to simply overlook all the steel that surrounds us. Steel has definitely been around for quite a while and is not going anywhere. From the kitchen pots that you cook with to the home that you live in, you can see steel virtually everywhere. Growing market demands in China, India and The Gulf have produced a medium term price pressure on Iron Ore.

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