By Phoebe Sedgman - Feb 19, 2013
Bloomberg
Iron ore is poised to decline in the next two months as prices near the highest level since October 2011 discourage buyers from China, the world’s largest importer, according to Australia & New Zealand Banking Group Ltd.
Prices could slide $5 a ton to $10 a ton to the “high $140s,” Mark Pervan, head of commodity research at ANZ, said in an interview in Melbourne today. “At about $155, we think there’s slightly more downside risk.”
Iron ore surged 81 percent from a three-year low in September as China’s growth accelerated in the final quarter and port inventories dropped to the lowest level in more than three years, boosting demand for the steelmaking raw material. Steel mills in China, returning from Lunar New Year holidays, may not increase their stockpiles as much as anticipated because of the cost of imports relative to domestic supply, Arctic Securities ASA and RS Platou Markets AS said yesterday.
“The key question will be: are the traders prepared to come in now and start restocking,” said Pervan. “Probably not, it’s probably a little too high. What it does mean is that they’ll be quite opportunistic to buy slight dips. You might see easing prices, but it won’t fall sharply.”
Ore with 62 percent content delivered to the Chinese port of Tianjin rose 1.4 percent to $157.20 a dry ton yesterday, the highest since Jan. 10, according to The Steel Index Ltd. Prices were unchanged last week during the Lunar New Year holiday.
Volatile Range
Prices may trade in a $40 range between now and the end of the first quarter, according to Justin Smirk, senior economist at Westpac Banking Corp. Sydney-based Smirk is the most accurate base-metals forecaster tracked by Bloomberg in the past three quarters and correctly predicted a slump last year.
“We’ve still got a target of $170 to be hit sometime before the end of the June quarter, but it could be quite a volatile range,” he said by phone today. “We have to see how the demand side kicks in, with restocking and rebuilding inventories. But we also need to see how the Chinese supply side is responding to these high prices.”
Inventories at Chinese ports dropped 5.2 percent this year to 66.9 million tons on Feb. 1, the lowest since January 2010, according to data from Beijing Antaike Information Development Co. Iron ore reached $158.50 a ton on Jan. 8, the highest level since October 2011, after rallying from $86.70 in September.
“It has been fairly momentum-based and what will happen now is there’ll be a pause with the New Year, a reality check,” ANZ’s Pervan said. “We’ve seen it trade at $140 a ton and stay there comfortably.”
Iron ore is measured in dry tons, or metric tons less moisture. At Tianjin port moisture can account for 8 percent to 10 percent of the ore’s weight.
Bloomberg
Iron ore is poised to decline in the next two months as prices near the highest level since October 2011 discourage buyers from China, the world’s largest importer, according to Australia & New Zealand Banking Group Ltd.
Prices could slide $5 a ton to $10 a ton to the “high $140s,” Mark Pervan, head of commodity research at ANZ, said in an interview in Melbourne today. “At about $155, we think there’s slightly more downside risk.”
Iron ore surged 81 percent from a three-year low in September as China’s growth accelerated in the final quarter and port inventories dropped to the lowest level in more than three years, boosting demand for the steelmaking raw material. Steel mills in China, returning from Lunar New Year holidays, may not increase their stockpiles as much as anticipated because of the cost of imports relative to domestic supply, Arctic Securities ASA and RS Platou Markets AS said yesterday.
“The key question will be: are the traders prepared to come in now and start restocking,” said Pervan. “Probably not, it’s probably a little too high. What it does mean is that they’ll be quite opportunistic to buy slight dips. You might see easing prices, but it won’t fall sharply.”
Ore with 62 percent content delivered to the Chinese port of Tianjin rose 1.4 percent to $157.20 a dry ton yesterday, the highest since Jan. 10, according to The Steel Index Ltd. Prices were unchanged last week during the Lunar New Year holiday.
Volatile Range
Prices may trade in a $40 range between now and the end of the first quarter, according to Justin Smirk, senior economist at Westpac Banking Corp. Sydney-based Smirk is the most accurate base-metals forecaster tracked by Bloomberg in the past three quarters and correctly predicted a slump last year.
“We’ve still got a target of $170 to be hit sometime before the end of the June quarter, but it could be quite a volatile range,” he said by phone today. “We have to see how the demand side kicks in, with restocking and rebuilding inventories. But we also need to see how the Chinese supply side is responding to these high prices.”
Inventories at Chinese ports dropped 5.2 percent this year to 66.9 million tons on Feb. 1, the lowest since January 2010, according to data from Beijing Antaike Information Development Co. Iron ore reached $158.50 a ton on Jan. 8, the highest level since October 2011, after rallying from $86.70 in September.
“It has been fairly momentum-based and what will happen now is there’ll be a pause with the New Year, a reality check,” ANZ’s Pervan said. “We’ve seen it trade at $140 a ton and stay there comfortably.”
Iron ore is measured in dry tons, or metric tons less moisture. At Tianjin port moisture can account for 8 percent to 10 percent of the ore’s weight.
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