By Melissa Pistilli-Exclusive to Iron Investing News

Tuesday afternoon, crippled resource stocks gained relief from the Fed's emergency interest rate cut ^[1]. The resource market seemed to benefit the most. The S&P/ASX 200 materials index, with 43 stocks related to the resource market, bounced back 2.9 per cent.

Metals prices have fallen dramatically from their bull market highs over the past few months. The current financial unraveling across the globe has led many to question the future stability of economies worldwide, which has negatively impacted demand for resources.

The iron ore market, like many of the industrial metals, has undoubtedly begun to feel the downward pressure of weakening global market conditions. Many analysts, however, still have hope for the future and believe iron's long-term outlook is strong.

"Domestic production and consumption in China has also slowed in a market with tighter credit conditions," said Citi commodities analyst Alex Tanks ^[2]. "But beyond 2009, we continue to forecast strong growth. Despite the near term negatives, don't forget the super-cycle: China's urbanisation is not complete and the long-term China story is still intact."

Two of the world's largest iron ore producers, Australia's BHP Billiton ^[3] and Rio Tinto ^[4], were the resource market's best performers Tuesday, their shares rising ^[5] 6.4 per cent and 3.9 per cent, respectively. Both mining companies are confident that the resource sector, iron included, will survive the latest global economic crisis. In April of this year, both companies negotiated record price contracts with iron ore purchasers in Europe and Asia. BHP and Rio expect that the upcoming price negotiations for next year will result in further increases.

Rio Tinto CEO Tom Albanese ^[6] has said confidence in sustained demand from China for raw materials remains high. "What we have been saying is that there has been a secular shift in the resources markets driven by Chinese demand," he said. "Our normal business cycles will persist, as we saw with the exaggerated upwards cycle in 2007 and are seeing with this shift down now. But real, underlying shift in demand caused by China's emergence will be sustained over many decades. It is not going away. That has changed the demand side of the resources business."

As for now, BMO Nestbitt Burns commodity analyst Bart Melek ^[7] said, the "smart money" views the current market crisis as a "buying opportunity." Melek believes the fundamentals of the global economy remain healthy and remarks that the important thing is that China will continue to grow." He has gone so far as to advise his clients that global iron ore demand will continue to increase in 2008 and stay "extremely strong" into 2011.

Rio Tinto's Pilbara train drivers to strike

The Construction Forestry Mining and Energy Union (CFMEU) announced Tuesday that train drivers working at Rio Tinto's Pilbara iron ore operations in Western Australia have committed to a 12-hour strike ^[8] to take place this Saturday.

On Monday evening, the mining giant's 39 train drivers voted unanimously to carry out the work stoppage in efforts to bring attention to their pay raise demands. The train drivers want an annual pay raise of 4.75 per cent, as well as US$20,000 a year for those employees who'll be most affected by the company's plan to install driverless trains at Pilbara by 2012.

The union has defended the pay increases by pointing out that the 4.75 per cent salary increase matches the consumer price index adjustments to the end of June. Also, some train drivers will take a US$20,000 reduction in yearly earnings if Rio Tinto changes over to driverless trains on its main rail line.

"We continue to talk to all workers, as we did before," said a Rio Tinto spokesperson. "We have been directly engaged with our staff since 1992 and not lost a day to industrial dispute since then."

CFMEU mining division Secretary Gary Wood said the strike action would affect Rio's iron ore output, but the Rio spokesperson commented that any discussions about the effect the action might have on ore output "was purely hypothetical."