If the global economy is slowing, iron ore miners have not noticed. The producers of the steelmaking commodity are partying away. The Platts index-based price for the grade of ore used as a reference by the likes of Vale and Rio Tinto for fourth-quarter contracts is $175.63 per tonne, nary a percentage point below that for the third quarter. Miners’ move from an annual to a quarterly pricing policy has helped them to lock in a 30 per cent spot price rise over the past year. The lack of price weakness reflects the sources of demand: about three-quarters from emerging markets, mostly China. Chinese demand for iron ore will still increase smartly even if the growth rate of gross domestic product slows to 7 per cent.

The miners – Anglo American, BHP Billiton, Rio Tinto and Vale – are bullish about the outlook. Rio, mostly an iron ore miner, predicts that the world will need an extra 100m tonnes a year for each of the next eight years – requiring a near doubling in production from 2010.

To meet the expected demand, miners are investing. And why not? Current iron ore prices are attractive. When Anglo American’s Minas-Rio project in Brazil starts to ship in two years, the cash cost of landing a tonne of ore in China could be just $43. The project pipeline may indicate that overcapacity looms: more than 1.5bn tonnes of capacity over four years, Citi notes. Rio, for example, is expanding in Western Australia by almost 50 per cent and has invested with Chinalco in Guinea. BHP and Fortescue Metals are also expanding.