Goldman and Its Biggest Critic Agree on Iron Ore Outlook – by Luzi-Ann Javier and Joe Deaux (Bloomberg News – February 8, 2019)

It took massive output cuts from the world’s largest iron ore producer to get Goldman Sachs Group Inc. analysts and their biggest critic to agree on their outlook for the steelmaking ingredient.

Just two months ago, Cleveland-Cliffs Chief Executive Officer Lourenco Goncalves wasn’t shy about calling out Goldman analysts for their iron ore price forecast.

“Let me refresh your minds,” Goncalves said in a presentation at the bank’s metals conference in November. “Last year, Goldman Sachs’s Jeff Currie said that I don’t know where prices go — $65, three months later will be $60, then it will be $55 then $50. It went $65, $70, $75 then $70 then $75 so you are wrong, I was right.”

This time around, Goldman analysts led by Currie are predicting a near-term supply shortfall after a fatal dam disaster prompted steep production cuts by Vale SA. The New York-based bank said other iron ore producers outside of Brazil won’t be able to boost their output fast enough, sending iron ore prices higher. Goncalves agreed.

Iron ore futures have surged to the highest since 2014 on concern that the increasingly severe crisis at Vale will curtail global supplies, tightening supply. Prices have climbed more than $15 dollars a ton since Jan. 24, a day before the dam collapse that triggered Vale’s production cuts.

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