FXStreet (Mumbai) – Goldman Sachs said in its latest report that iron ore is headed back below $50/tonne as low-cost supplies from Australia and Brazil expand and a slump in steel squeezes mills’ profits, Bloomberg reported on Tuesday. The price dropped to a one-month low.
Freight data from terminals in the two biggest shippers showed volumes rose 10% in the first half of this month compared with the average over the first five months, the bank said in a report.
The rise will be sustained, allowing inventories in China to recover and sending prices lower again, Goldman Sachs said, predicting ore will average $49/tonne in the third quarter and $48/tonne in the final three months.
Goldman Sachs further explained that the forecast increase in supplies will help to shore up the inventories that were depleted by weaker-than-expected exports in April and May and, once they are back to normal, low prices will again be required to balance the market.
(Market News Provided by FXstreet)