By Paul Ploumis (ScrapMonster Author)
February 02, 2016 03:06:50 AM
SPOKANE (Scrap Monster): According to the World Bank prediction, iron ore prices are likely to record the largest drop among all metals during the current year. The quarterly report published by the bank has lowered the 2016 price forecasts for iron ore significantly.
The average price of iron ore is expected to touch low levels of $42 per ton in 2016, significantly lower by almost 25% when matched with the average prices of $55.80 during last year. This is considerably lower when compared with its earlier price forecast. In October last year, the World Bank had predicted that iron ore prices are likely to average around $59.50 per ton in 2016. The World Bank also predicts that iron ore prices are likely to average around $44.10 per ton in 2017. The prices are expected to stay below $50 per ton before 2019. It also expects the prices to rise to $51 per ton by the end of 2019.
The supply of low-cost iron ore has increased in China. The inventories at Chinese ports are likely to exceed 100 million tons, ahead of the Spring Festival holidays when steel making activities are expected to remain subdued. As steel mills resume production after holidays, the iron ore inventories at ports are expected to decline. The ramp up in steel making activities after Lunar New Year holidays usually result in increased consumption of iron ore. However, traders are not optimistic this year, primarily on account of country’s slowing economy.
Meantime, Chinese customs data indicate that iron ore imports by the country surged higher by 17% over the previous month to touch record high of 96.27 million tons during December last year.
The World Bank report also forecasts 16% decline in copper and nickel prices during 2016.