Iron Ore Prices to Rise, Buy BHP Billiton: Analyst

Aerial of iron ore ships at Port Hedland.
Peter Hendrie | Photographer's Choice | Getty Images
Aerial of iron ore ships at Port Hedland.

BHP Billiton, the world's largest miner, said Tuesday that it sees iron ore demand from top consumer China flattening, but one expert forecasts iron ore prices to rise this year and recommends picking up BHP shares.

Jonathan Barratt, CEO & Founder of Sydney-based commodity market research and analysis firm Barratt's Bulletin, told CNBC, "This is a good opportunity to buy BHP stocks on the dip. I think generally the forecast for rising iron ore prices would remain the same."

BHP shares listed on the Australian Stock Exchange fell a marginal 0.11 percent after the news of a possible plateauing of Chinese demand.

China's appetite for iron ore has been a key element driving growth and profitability at BHP Billiton . But concerns have been growing about demand after China cut its 2012 growth target to 7.5 percent earlier this month.

Barratt said that China will not allow GDP to fall below its official target rate and that Beijing has the extra firepower to kick start its economy in case that happens.

He adds that China will continue to inject liquidity into the market by cutting the reserve requirement ratios at banks, which will propel growth. "And at the end of the day this [iron ore] is a resource that is required to help the Chinese economy grow."