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Citi turns extremely bearish on iron ore; prices to hit $50 per tonne

iconMar 12, 2015 11:13
Source:SMM
According to top Citi analyst, the iron ore prices are likely to drop further.

Author: Paul Ploumis
11 Mar 2015 Last updated at 01:41:47 GMT
BEIJING (Scrap Monster): According to top Citi analyst, the iron ore prices are likely to drop further. The prices may hit as low as $50 per tonne. However, other analysts were not too bearish in their forecasts. According to them, even if the prices fall to $50 per tonne levels, it would only be temporary. The prices are expected to soon recover to remain in the range between high 50’s and low 60’s during the forthcoming weeks, they noted.

According to Mark Lyons, Trading Head-Iron Ore and Steel, Citi, the Chinese steel market continues to remain weak and has shown no signs of recovery even after the Lunar New Year holidays. The significant build-up of iron ore stocks ahead of holidays and the imminent fear over the Chinese administration’s tightening environmental concerns will impact the sector badly. The Chinese steel production is expected to remain weak on account of subdued demand from various sectors.

Citi forecasts the Chinese finished steel exports to fall drastically by 20 million tonnes to 70 million tonnes, adding further pressure on domestic prices. However, data for the initial two-month period of the year suggests that annualized finished steel exports by the country may surpass 100 million tonnes. Incidentally, exports during February dropped when compared with January.

Meantime, the country’s steel output surged almost 8% during late-February, as per latest production statistics released by the China Iron and Steel Association (CISA).
 

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