The wave of euphoria that lifted iron ore prices to record highs has ebbed. Focus is now on the downside risks, which should be enough to drag prices down in the short-term. Nevertheless, fundamentals are broadly positive, so economists at ANZ Bank don’t expect this to develop into a sharp sell-off.
Key quotes
“We expect Asian infrastructure and manufacturing demand to remain strong. Steel production should also benefit from environmental policies.”
“Some headwinds are gathering for iron ore. Restrictions on the property sector are likely to take the edge of steel demand growth. Weak margins for Chinese steel mills may lead to capacity reductions and Chinese authorities reinforcing supply side reforms.”
“We reiterate our 12-month price target of $100/t.”
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