BMI Research: Global Iron Ore prices to range from $50 to $70 per ton in near term

SPOKANE (Scrap Monster): The latest study report published by BMI Research predicts that iron ore prices are likely to range between $50 and $70 per tonne during the next three to six months time period. The price of the steel making raw material will get big boost from rise in demand from China-the largest consumer of global iron ore shipments.

According to the research report, the additional stimulus measures by Chinese administration will lead to further tightening of market, providing support to prices over H1 2017. Earlier, BMI Research had predicted loosening of iron ore balance in H2 2016, which may lead to downward pressure on prices starting beginning of 2017. However, the enhanced infrastructure stimulus measures by the country’s administration have forced them to change the view. BMI Research expects that Chinese stimulus measures are now likely to stay strong through to the end of next year.

However, the prices will begin to witness downside pressure by end-2017. The global iron ore market supply is expected to remain strong from major producing countries including Australia and Brazil. This will partially offset the decline in Chinese iron ore production, BMI Research report notes.

BMI Research has announced upward revision to iron ore price forecasts for 2017 and 2018. The agency has raised the forecasts of average prices from $45 per tonne in both the years to $55 per tonne in 2017 and $48 per tonne in 2018. The higher price forecasts indicate that the agency’s core view towards metal prices has turned more bullish at least for the near term. In the longer term, the production curtailments by high-cost Chinese mines, coupled with slowdown in production growth by other major producers will reduce global oversupply and prevent further weakening of iron ore prices.

Meantime, the latest import statistics released by the Chinese General Administration of Customs indicate that Chinese imports of iron ore surged higher by 9.1% year-on-year during the initial nine-month period of the current year to total 762.594 million tons. The imports had totaled only 698.923 million tons during January to September in 2015. The country is on track to import more than 1 billion tons of iron ore for the first time ever this calendar year.

The imports of agglomerated iron ore during Jan-Sep ‘16 totaled 11.119 million tons, whereas the imports of non agglomerated iron ore totaled 751.475 million tons in Jan-Sep ‘16, accounting for over 98.5% of the total imports. This is in marked contrast to marginal 0.4% rise in crude steel production over the same period. The country’s crude steel output totaled 603.78 Mt in Jan-Sep ’16 as against the output of 601.37 Mt during the corresponding period in 2015.

The iron ore stockpiles held at the Chinese ports have expanded to the highest level in almost two years, reflecting optimistic outlook on steel demand and prices by steel mills in the country. The port inventories are up by almost 15% when matched with the previous year. As on end-October this year, the inventory of imported iron ore at Chinese totaled 108.29 million mt. CISA predicts that the country’s finished steel market may not report significant improvement in the forthcoming weeks, on account of colder weather conditions. Accordingly, iron ore prices are likely to see some fluctuations during this period.