US-based Citigroup has announced that it has lowered its iron ore price forecast and that it expects prices to see $70/mt in May due to softening steel demand that will put pressure on prices.
In its research report, Citigroup said that there will be a surplus of more than 80 million mt of iron ore in the second half of the year, following a 17 million mt deficit in the first half. This indicates that the current spot iron ore price of $80/mt will decline, SteelOrbis understands. According to Citigroup, with the expected surplus, the $70/mt mark which was anticipated for the next three months will be reached within weeks.
Citigroup forecasts that supply disruption in the iron ore segment will remain low compared to blast furnace closures including 106 million mt of annual blast furnace capacity closures outside of China during the past two months, out of which 65 million mt is from Europe and Japan.
“We now expect steel demand excluding Asia to fall 30 percent year on year in the second quarter and 25 percent year on year in the third quarter before rising four percent year on year in the last quarter of the current year, as the weakness in end-use demand, particularly demand for the automobile sector, is expected to persist into the third quarter despite the planned restart of factories over the coming weeks,” Citigroup said.
