by Chris Becker
Just in from Bloomberg:
Iron ore will average $58 a metric ton in 2015 and $62 a ton in 2016, down from estimates of $65 for both years, analysts including Ivan Szpakowski wrote in a report dated today. The bank’s forecasts for coking coal and thermal coal were also reduced for the same period, according to the report.
That’s a significant cut but makes sense given the huge oversupply of seaborne iron ore continuing to come on stream and at lower cost. Well at least to the survivable senior miners.
And for more clarification on the lower freight costs for Vale vs BHP/RIO as reported earlier in our daily price update:
Iron ore shippers are now benefiting at the expense of Chinese miners as falling transport costs erode domestic producers’ geographic advantage, and depreciating exporter currencies provide a further boost, Szpakowski wrote.
The more distant producers and consumers stand to benefit most “as freight represents a greater share of total costs for such transactions, creating greater savings as costs have fallen,” the analysts wrote. “For example, iron ore freight rates from Brazil have declined $10 a ton since July, while those from Australia have (only) declined $3 ton.”