Moody’s lowers iron ore and metallurgical coal price forecasts

Monday, 20 April 2015 15:08:06 (GMT+3)   |   Istanbul
       

International credit ratings agency Moody's has announced that it has lowered its price forecasts for iron ore and metallurgical coal in response to slowing steel production in China and rampant oversupply, particularly of iron ore, which will keep prices low through at least next year. Moody's price forecast for iron ore now stands at $40/mt for both 2015 and 2016, while its price forecast for metallurgical coal stands at $100/mt in 2015 and $110/mt in 2016.

"Companies' earnings will be materially affected by the lower prices for metallurgical coal and iron ore. Slower global economic expansion, particularly in China, which accounts for approximately 50 percent of global steel production, will continue to limit growth in steel demand, while at the same time iron ore and metallurgical coal, two key raw material inputs, are in oversupply," the Moody's report noted.

Production of iron ore continues to increase particularly in Australia and Brazil, with the reasons for this including a desire to maintain market share and expectations that high-cost producers will be forced to exit the market, while the lower costs associated with higher volumes help mitigate price declines.

According to Moody's, while some capacity has come out of the iron ore market, the shutdowns pale in comparison to the expected new supply. Metallurgical coal likewise remains in oversupply and US metallurgical coal producers' announced cuts are taking longer than expected to be implemented.


Similar articles

India’s coking coal port traffic up 10% in April-February of FY 2023-24

11 Mar | Steel News

CISA: Coking coal purchase cost in China down 11.21 percent in January

29 Feb | Steel News

Metinvest’s pig iron and crude steel output down in 2023

21 Feb | Steel News

India’s coking coal port traffic up 11 percent in April-January

06 Feb | Steel News

CISA: Coking coal purchase cost in China down 18.75 percent in 2023

31 Jan | Steel News

India’s coking coal port import traffic up 13% in April-December

05 Jan | Steel News

CISA: Coking coal purchase cost in China up 2.03 percent in November

29 Dec | Steel News

SteelOrbis year-end review: Iron ore and coking coal prices to remain high in 2024 owing to demand

26 Dec | Scrap & Raw Materials

SteelOrbis year-end review: European steel industry loses its competitiveness

26 Dec | Steel News

Fitch Ratings increases iron ore price assumptions for 2023-2026

12 Dec | Steel News