Iron ore prices rose yesterday in China as demand pushed spot prices of the metal to the highest in more than a week, with futures spiking alongside as the coal squeeze continues:
And there’s more argy-bargy on where the precious metal will go in 2022 with forecasts still all over the place. More from AFR:
The iron ore price has defied forecasts for a fall into the end of last year to reach four-month highs of $US126.71 a tonne on December 21, after the People’s Bank of China cut one-year lending rates to boost economic momentum across the world’s largest buyer of the steel-making ingredient.
As it turned out, spot prices averaged $US155 a tonne in 2021. Consensus expectations for 2022 are $US90 a tonne versus the December 31, 2021, spot price of $US120.75 a tonne, and Mr Cleary said the market’s expectations for 2022 were probably too pessimistic again.
Morningstar forecasts iron ore prices to average $US116 a tonne from 2021 to 2024 inclusive.
“In the short term, the price can swing around – it’s been a volatile year,” said Mathew Hodge, Morningstar’s director of equity research.
“The constraints around power in China appear to be easing from their height a few months ago. Monetary policy has also loosened, which could provide an important signal for downstream steel producers that the government and central bank will support the economy and demand will improve.”
However, Mr Hodge warned 2022 could see supply increases from Australia and Brazil as Chinese demand flattens.