Author: Paul Ploumis12 Jun 2014 Last updated at 06:36:12 GMT
ALBANY (Scrap Monster): According to latest iron ore price forecast by the Citigroup Inc., the raw material prices are likely to bottom out at $90 per tonne. According to the multinational financial services firm, the likelihood of iron ore prices declining sustainably below $90 is ruled out for the rest of the year. Citigroup also reiterated its average forecast for Q4 2014 at $100 per tonne.
According to Citigroup analyst, the prices sustained at $90 may turn more than a quarter of Chinese production facilities unprofitable to operate. The idling of facilities in China- the main consumer of the raw material, may also spur production cuts at mines outside the country.
Meanwhile, China Iron and Steel (CISA) in its monthly report warn that iron ore prices are expected to fall further. Steel makers are likely to go ahead with production cuts due to weak market demand. The production cuts at steel mills may lead to drop in demand for iron ore, which in turn may lower the raw material prices further lower. The government restrictions on iron ore financing is also expect to push the prices lower.The demand for steel is expected to taper off. Also, the Chinese housing market is seen cooling off.
The iron ore prices have declined almost 30% year-to-date.