The Commonwealth Bank of Australia (CBA) has revised its long-term iron ore and coking coal forecasts amid the pandemic, lower Chinese commodity demand, and the war in Ukraine, according to media reports.
The CBA expects iron ore prices to fall to US$120/mt by the end of September and to US$100/mt by the end of the year. This fall reflects China’s plan to cut steel production this year, maintaining its output level below 2021 levels. For 2023, the bank anticipates a further 20 percent decrease to US$80/mt for iron ore prices and prices are expected to stay at that level into 2025. The prices are currently around US$135/mt.
In July last year, iron ore prices had reached about US$200/mt and then decreased to US$92/mt in November.
In addition, the bank has also revised its coking coal price outlook, expecting coking coal prices to increase from US$143/mt to US$150/mt, taking into account the lack of investment in coking coal production. As a result of the increase in coking coal prices, decarbonization efforts may accelerate.
