Escalating concerns that the coronavirus
pandemic may curb iron ore supply in Brazil are set to further
support prices — already at an eight-month high — and are
pushing back forecasts for the timing of a descent into the
$70s.
Citigroup Inc., which said in early May that a fall to $70
a ton was due in coming weeks, now expects a drop to that level
at the end of this year. Larger-than-expected potential losses
from Brazil, together with strong demand from China’s steel
mills, will see iron ore hold up for longer before a recovery in
global seaborne supply pressures prices lower, according to the
bank’s commodities strategist Tracy Liao.
“I wouldn’t be surprised to see prices reaching $100,” Liao
said, highlighting that China’s port stockpiles are already the
lowest since 2016. Chinese stimulus measures, including the
issuance of special bonds to help finance infrastructure, will
also aid demand, she said. Benchmark spot prices were last at
$97.15, near the highest since September.
(Bloomberg)