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Iron ore: Analysts promise to drop in value

17 June 2014

Analysts quite unanimous on the issue of the cost of iron ore: they forecast prices will fall to below USD 100 per ton. The grounds for such assumptions quite significant: here and an overabundance of supply and reduced demand, which is largely dependent on the Chinese economy. However, keep relative stability of financial markets and spot prices, so maybe the situation is not so bad, as the outline of its experts. Analysts company «Standard Chartered» and «Credit Suisse» confident that last year's depreciation of 15% will increase by 16% this year and in the second half of 2014 the price will drop to the level of less than USD 100 per ton. «Goldman Sachs» supports the outlook for the cost of the fall, but the average price points within 108 USD. However, for 2015, analysts «Goldman Sachs» predict a decline in prices up to 80 USD per ton.

Industry experts predict a surplus of raw materials in the second quarter of this year — if the 2013 was available for a deficit of 77 million tons, in 2014, the excess is expected to be 136 million tons. Analysts «Morgan Stanley» believe that the first half of the year will be completed in excess of supply over demand of 14 million tons of this volume to the end of the year will increase to the level of 65millionov tons, next year will rise to 158 million. Tons.

According to forecasts «Standard Chartered» Australia will supply in the amount of 92 million tons, «Deutsche Bank» supplies from Brazil is estimated to increase by 10%, amounting to 410 million tons, will not remain on the sidelines and Indian exports -… Was recently revoked a ban on production raw materials in Goa, and in fact the state has been a major supplier of iron ore. The ban came into force in 2012 as required to counter illegal production measures. After review by the Supreme Court of this situation, the supply volumes were limited to 20 million tons — is not the biggest index, but it is as a supplement to the existing excess seems essential.

Of course, there is a possibility that the excess will not be as global as the analysts are concerned, however, the decline in value is confirmed absolutely all professionals. Some stability will provide the Chinese economy, but the status quo will not last too long, because the annual increase in supply is forecast at 11%, and an increase in demand at the same time — only 4%. Thus, the average cost of raw materials in the first quarter amount to 129 USD per ton in the third to fall to the level of 114 USD per ton, the same indicators fourth of 108 USD per ton.

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