Citigroup cut its iron ore price estimate in a study on Tuesday that could hit $70 a tonne in May as weaker steel demand puts pressure on prices, according to foreign news Friday. Citigroup said it expected a surplus of more than 80 million tons in the second half of the year and a shortage of 17 million tons in the first half of this year .” This shows that there is ample room for the current spot price of $80 per ton to fall .” Citigroup said it expects spot iron ore prices to reach $70 a tonne in “weeks” in 0-3 months as the iron ore market turns into surplus. Analysts said the sell-off was slower than expected because of better-than-expected construction activity in China and the supply in Brazil since this year. Citigroup said supply disruptions, including the vale of brazil (vale) tailings dam disaster last year, remain too low, especially in the second half of 2020,” compared with demand shocks caused by blast furnace closures worldwide .” Citi’s study assumes vale produces 315 million tonnes of iron ore this year and expects another 20 million tonnes of supply to be disrupted by 2020. China’s steel demand is expected to fall by 1.5% in 2020, meaning that steel demand remained flat for the rest of the year, compared with a 7% year-on-year decline in apparent demand in the first quarter. In China, weak demand for manufacturing-related steel, especially exports, is expected to be offset by growth in the construction and machinery sectors for the rest of the year. Citigroup said annual production of blast furnaces outside China has shut down 106 million tonnes over the past two months and is at greater risk of closure. That includes 65 million tons of capacity from Europe and Japan, and Citigroup expects demand for sea iron ore to fall in the second and third quarters. “We now expect steel demand outside Asia to fall by 30 per cent in the second quarter from a year earlier ,25 per cent in the third quarter from a year earlier, followed by a 4 per cent increase in the fourth quarter due to weak end-user demand, particularly in the automotive sector, which is expected to restart factories in the coming weeks, but weak demand will continue into the third quarter of this year
Post time: May-06-2020