China’s opaque domestic iron ore sector remains the major wildcard facing the global iron ore industry, with mine reopenings there likely to increase pressure on the price of the steelmaking ingredient.
The surprisingly strong iron ore price of the past year has started to look increasingly shaky in recent weeks, having fallen by more than 13 per cent over the past month after peaking at just under $US95 a tonne in February.
A rise in iron ore stockpiles held at Chinese ports to an unprecedented high of about 230 million tonnes in recent weeks has only added to the uncertainty.
Tracy Liao, the Asia commodities strategist with Citi, told the Global Iron and Steel Conference in Perth yesterday that the bank was expecting to see a sharp fall in iron ore prices over the months ahead due to a confluence of factors.
“We are generally bearish on iron ore and bearish against the futures curve, and we think iron ore prices may fall to the 50s or even 40s (dollars per tonne) in the medium term because the temporary tightness will get resolved as different projects continue to ramp up,” Ms Liao said.
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