Goldman Sachs Lowers Iron Ore Price Forecast
Goldman Sachs lowered its forecast for iron ore prices in the fourth quarter of 2024 by $15, bringing the price down to $85 per metric ton. This adjustment was made in light of a supply glut, despite stable demand from China, the world’s leading consumer.
Supply Glut and Stable Chinese Demand
Dalian iron ore futures saw an uptick, driven by optimism about Chinese stimulus measures and a recovery in steel demand, even as the country grapples with a sluggish economic rebound.
Potential for Continued Price Declines
In a recent note, analysts at Goldman warned that prices could continue to decline in October due to a sustained rise in iron ore inventories, although there may be temporary support from restocking efforts ahead of the Golden Week.
Weak Exports and Global Oversupply
The bank stated, “Iron ore is essential for China’s industrial sector, especially in steel production,” and pointed out that while exports from China may decrease, domestic demand is unlikely to provide sufficient support, putting prices at risk.
Need for Price Drops to Trigger Adjustments
The report also indicated that, despite a decrease in exports from India, the world’s fourth-largest iron ore producer, global oversupply persists due to weak demand, which may require further production cuts from lower-cost producers to restore balance in the market.
Goldman concluded that additional drops in iron ore prices may be necessary to trigger the required supply adjustments.
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