Cap SA (CAP), Chile’s largest iron-ore miner, touched the highest in seven weeks on a recovery of prices in China for the raw material used to produce steel.
Cap advanced 3.5 percent to 16,620 pesos at 3:51 p.m. in Santiago after touching 16,650, the highest intraday level since Nov. 12. It was the best performer on the benchmark Ipsa index, which rose 0.6 percent. The Santiago-based company is also the country’s biggest steel producer.
“It’s all about iron-ore prices today,” Jose Manuel Edwards, an analyst at Santiago-based brokerage IM Trust SA, said in a telephone interview. “Iron mining now accounts for most of Cap’s gross profit as steel margins have fallen and iron prices have been recovering.”
The price of imported iron ore in the Chinese port of Tianjin has increased 25 percent in the past month to $144.90 a dry ton, according to The Steel Index Ltd. It fell to $86.70 on Sept. 5, the lowest since October 2009.
While iron-ore mining represented 53 percent of Cap’s revenue in the third quarter of 2012, with steel production at 44 percent, mining of iron ore accounted for 86 percent of gross profit versus 4 percent for steel, according to data compiled by Bloomberg.
Cap has gained 14 percent since reaching 14,560 pesos on Dec. 10, its lowest price in a year.
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