From Bloomie:
“We think this market will go back to $35 during the fourth quarter,” analyst Christian Lelong said in an interview. That’s 50 percent below Thursday’s close of $70.46 a dry metric ton, the highest level since January 2015. “Our expectation is the oversupply in the iron ore market will return.”
“Going into the second half of the year, what are you going to need to absorb all that iron ore supply?” New York-based Lelong said by phone from London on Thursday. “It’s going to be very hard to have strong enough demand growth in the Chinese steel sector to keep things in balance.”
“When we look at the profitability of steel mills, we’ve gone from multiyear lows late last year to a multiyear high in the last couple of weeks. It’s a huge swing,” Lelong said. “The margins are so attractive that you can afford to pay higher and higher prices for your raw materials. That means iron ore is now well above the cost curve”, he said.
