NEW YORK (Dow Jones)--If a moderation in China's industrial growth were to pressure commodity prices, iron ore would hold at around $120-$130 a ton, BHP Billiton Ltd.'s (BHP.AU) chief executive said Friday.

"That's the marginal cost of supply, and at that level it's very buffered," said Marius Kloppers, CEO of the Australian mining company, one of the world's largest iron-ore producers.

The price of iron ore, the main component of steel, hit a high of $186.50 a ton in April, more than triple the lows from 2009. Iron ore has since slipped due to lower demand from China. On Friday, spot iron ore delivered into China was $166.60 a metric ton, according to The Steel Index.

China's imports are falling on a combination of high prices and government measures aimed at damping what many see to be an overheated economy.

Because demand is outstripping supply in the short term, iron-ore prices will be prone to volatility, Kloppers said. He added that the market shouldn't underestimate the ability of Chinese firms to respond to high prices by boosting domestic output.

"They will kick in and quite quickly push it down again," Kloppers said of the price of iron ore.

Steelmakers around the world have recently announced price increases for their products in order to recoup some of the surge in raw-material costs.

Despite the recent decline in iron-ore prices, China and other emerging markets are seen driving demand in the long term as these countries continue to invest in industrialization and urbanization. China consumed about 68% of the 1 billion tons of iron ore traded overseas in 2009, according to estimates cited by Bernstein Research. This is up from 50% in 2007.

-By Anna Raff, Dow Jones Newswires; +1 (212) 416-2150; anna.raff@dowjones.com

(Alex MacDonald, Devon Maylie and Chuin Wei Yap contributed to this article.)

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