Demand for iron ore in China has weakened slightly since March 21, while iron ore prices have declined by around seven percent in the same period. Meanwhile, there are different expectations for the future trend of iron ore prices for China. Some analysts foresee a sideways movement in the price range recorded in March, i.e., $50-63/mt CFR, while others still believe that iron ore prices will decline and that the current price levels are not sustainable. Hancock Prospecting executive director Tad Watroba told Fairfax Media that he is expecting iron ore prices to be maintained at the current levels in the range of $55-60/mt for the rest of the year. On the other hand, some analysts insist on their forecast of a downward movement, while McKinsey & Co. has reduced its expectations for iron ore prices to $45-55/mt. Iron ore supply has been in excess of demand for more than 18 months.
Meanwhile, according to McKinsey & Co., the recent rebound in the real estate sector in China will not be reflected in the construction sector and iron ore supply will remain plentiful, causing iron ore prices to decline to $45/mt. McKinsey & Co. added that the increases seen in iron ore quotations are temporary and that China's steel sector is going through very difficult times. Goldman Sachs' forecast for iron ore prices is at $35/mt for the end of 2016, while Citigroup's expectation for iron ore is at $38/mt for 2016 and $35/mt for 2017 and 2018. On the other hand, Tony Ottaviano, vice president strategy, development and planning at BHP Billiton, has stated regarding iron ore prices that BHP Billiton foresees sideways movement for a little while longer.