Strategists at UK-based economics company Capital Economics have stated that they expect the price of iron ore to fall to around $140/mt by the end of this year, and to drop further to $120/mt by the end of 2022, as the market shifts into a surplus.
Capital Economics stated that it doubts that the Chinese government’s measures taken to cut speculation will have much of an effect on the price of iron ore over the months ahead, though the market fundamentals point to the iron ore price falling further before the end of 2021.
“On the supply side, Brazil’s iron ore exports are returning close to the levels seen before the Brumadinho dam collapse, and domestic production in China surged in March and April. Furthermore, while stocks of iron ore held at Chinese ports have been drawn down slightly over the past month, they are still nowhere near the levels that would be consistent with the current iron ore price. Meanwhile, the withdrawal of policy stimulus in China, which will probably be felt hardest in the construction sector, should weigh on demand,” Adam Hoyes, Capital Economics assistant economist, said.
The Chinese government has taken measures to curb the rapid rises of iron ore prices following the Labor Day holiday amid the impact of big increases in commodity prices in the international market, as SteelOrbis previously reported.