GS rockets iron ore price forecasts to -40% below Budget

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From Forexlive:

  • For Q2 2016, Goldman Sachs has hiked their price forecast by 47% to $55 / metric ton
  • Q3 2016 forecast up 20% to $45
  • Q4 2016 +14% to to $40
  • Full year estimate is 19% higher to $47 a ton
  • 2017 & 2018 forecasts have been left unchanged at $35

That means a 2016/17 Budget average of $38.75CFR. Subtract $5 for freight to get FOB and you find that GS has just rocketed its iron ore price forecasts to -40% below that of the Budget.

These are almost identical to my forecasts now so they represent -$8 billion in Budget revenue gone and roughly -1.5% of nominal GDP for this Budget year and much worse in outer years.

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Yes, that’s how bad Turnbull’s Treasury is.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.