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Fortescue reports tripled full-year profits, says iron ore moving back into balance

Fortescue CEO: We'll continue to cut debt
Bluescope Steel CEO: Excess steel was 2016's big issue

The iron ore market is recovering after several years of tumbling prices because much of the excess low-cost supply has been absorbed, according to the world's fourth-largest producer.

Australia's Fortescue Metals Group reported a full-year net profit of $985 million, triple last year's $316 million net profit for the year to end-June, on the back of a sharp improvement in production costs. The company also hiked its final dividend by 500 percent to 12 Australian cents (9.1 U.S. cent) a share, up from just 2 cents in the same period last year.

Speaking to CNBC's "Street Signs, " Fortescue CEO Nev Power said the iron ore market seemed more balanced than it had been in the past.

"Provided that the industry continues to respond to the market rather than just produce for production's sake, we should see the balance continue going forward," Power said.

A Chinese worker polishes steel at an offshore oil engineering platform in Qingdao, China.
STR | AFP | Getty Images

Iron ore prices are now around $60 a metric ton, after hitting all-time lows around $37 a ton in December. The rise has been fueled by increased building activities in China, the world's largest iron ore consumer.

Power said continued urbanization and infrastructure spending in China would continue to support iron ore and steel demand.

However, Paul O'Malley, CEO of Australian steel producer BlueScope, was slightly more cautious, telling a conference call that global steel oversupply may persist for some time.

O'Malley told CNBC's that with China putting the pressure on its own over-producing steel mills to cut production to meet pollution guidelines, demand for iron ore may slow in the future.

BlueScope, which has been on a turnaround program over the past year after tanking steel prices threatened its historic Port Kembla steel mill in the Australian state of New South Wales, reported an underlying net profit of $293.1 million for the year to June 30, up 119 percent from $134.1 million in the same period last year, after slashing costs in its home country.

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