Oct 1 (Reuters) – – It’s a brave analyst these days who would call a bottom in the iron ore price, which makes the call for better times by 2017 from the normally cautious Australian government forecaster all the more interesting.
While any forecast for iron ore prices to rise is worth more than just a glance, there are a few things to note about the Australian Department of Industry’s Resource and Energy Quarterly, published on Wednesday.
The most important is that the government forecaster isn’t calling for a dramatic rebound in iron ore, rather for modest gains.
The second is that the recovery isn’t expected until 2017, with next year expected to show further losses for the steel-making ingredient. The report projected that iron ore will rise to average $60.40 a tonne in nominal terms in 2017, up from $51.20 in 2016 and $52.90 this year.
By way of comparison, the department’s June quarter report forecast iron ore would average $54.40 a tonne in 2015 and $52.10 in 2016, but didn’t provide forecasts for further out years.
What has effectively happened is that the department has become slightly more bearish on the view for this year and next, before expecting a modest recovery from 2017 onwards.
Just how modest is the recovery expected to be?
The spot price of iron ore in Asia .IO62-CNI=SI was $54.40 a tonne on Wednesday, down about 24 percent from the end of last year, but up from the $44.10 reached on July 8, which was the lowest since spot assessments started in November 2008.
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