LONDON (Scrap Monster): Goldman Sachs in its latest ‘Mining Commodities Outlook’ has predicted that global iron ore supply growth will outpace the demand growth in 2014, thereby leading to iron-ore oversupply. The prices are set to decline in 2014 and decline further in 2015, the report says.

 

The iron ore supply from the major producing regions such as Australia, Brazil, China is likely to be impacted by weather-related disruptions in the first quarter of the calendar year. However, early signs of oversupply are expected from second quarter onwards.GS notes that the market may remain stable in the absolute short term but seaborne supply may overtake demand growth by second quarter of the financial year.

 

According to GS, the Australian production capacity will continue to expand in 2014. The expansions in other supply regions will drive the seaborne market into a period of structural surplus in 2014 and the scale of the surplus will grow into 2015.

 

The bank forecasts the 2014 average price for 62% Fe iron ore fines, CFR China at $108/dmt. The average price may further fall down to $80/mt in 2015. The forecast price for 2016 and 2017 are $82/dmt and $85/dmt, respectively.

 

Author: Paul Ploumis