Why iron ore price wonn't comeback in 2018

News posted from mining.com that, BMI Research says the firm’s analysts maintain their iron ore price forecast at $70/tonne for 2017 and $50/tonne for next year.

“With the conclusion of the 19th National Party Congress and the consolidation of power around President Xi, the refocusing of Chinese economic growth away from heavy industry to services will dampen Chinese demand for iron ore. When combined with simultaneous elevated global supply, this will put a lid on prices in the coming years,” the document states.

Beijing's war on smog has imposed production cuts to steelmakers of as much as 50 per cent. Last month, this new state of affairs prompted a plunge by 23 per cent of imports of high-quality iron ore fines and lump ore from Australia, Brazil and South Africa as factories work through inventory.

In this context, BMI predicts that iron ore prices will remain on a long-term gradual downtrend until at least 2021. “In addition, the price resilience seen in 2017 will slow consolidation among high-cost iron ore producers, namely in China, which will result in a prolonged global iron ore supply glut.

Despite this, we expect consolidation to ramp up over the coming quarters as muted revenues continue to force higher-cost producers to pursue a strategy of divestment of high-cost assets and retrenchment,” the report reads.

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