Deutsche Bank sees near-term iron ore price dropping below $120/tonne
May 17, 2012 | 09:06 AM
Global iron ore prices could drop to below $120 per tonne in the coming months on the back of disappointing Chinese spring steel demand and credit tightening, analysts at Deutsche Bank said in a research note on Thursday May 17.
Chinese steelmakers increased production in the first quarter of 2012 to cater for demand which failed to materialize, Deutsche Bank analyst Daniel Brebner said in the note.
India’s recent easing of an eight-month export ban on iron ore will also see more iron ore hitting the seaborne market and having a downward impact on prices.
“We see iron ore prices correcting further, possibly below $120 per tonne,” said Brebner.
The Deutsche Bank analysts highlighted declining domestic electricity production and rail freight traffic as key indicators that Chinese demand was faltering.
Spot iron ore prices have fallen rapidly in the past four weeks. The Metal Bulletin Iron Ore Index was calculated at $134.33 per tonne on Thursday May 17, down $10 from a month ago.