Australia and New Zealand Banking Group (ANZ Bank) is bearish towards iron ore prices, predicting that they would drop to around $95/mt, citing the following reasons.
1. Sluggish steel demand in China's real estate market during peak construction season is a major drag on iron ore and coking coal demand.
2. Tighter profit margins and efforts to curb losses at steel mills will slow steel production growth in the second quarter.
3. China's steel industry purchasing managers' index (PMI) reached 45 in April, the lowest level since December 2022.
4. The increase in the amount of steel produced using the electric arc furnace process is reducing the demand for iron ore.
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