From Bloomie:
Net supplies will increase about 60 million to 75 million metric tons in 2015, in line with a 75 million ton rise in 2014, as mine expansions in Australia and Brazil more than offset closures in China, according to Sanford C. Bernstein & Co. Morgan Stanley predicts a net rise of 63 million tons this year, with production expected to peak in September to October.
…The “main reason for price declines would be the continued push of the majors into a demand environment that does not need the tons,” Paul Gait, a London-based analyst at Bernstein, said in an e-mailed response to questions. Almost all of the new supply this year will be from Australia and Brazil, he said.
…“Iron ore may actually recover to the mid-$70s as demand recovers on the back of stimulus and faster closures of domestic supply” in China, Bernstein’s Gait wrote. “If I am wrong on this, the price could test $50 at the bottom.”
Wrong on all counts:
- iron ore is falling owing to increased competition including juniors and falling Chinese steel output;
- prices are likely to fall further despite Chinese stimulus which is only offsetting the downdraft in property, and
- $50 will not be the bottom.
Recall that Mr Gait is the sell-side’s loudest champion of the GLEN/RIO merger.
