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Thursday, June 8, 2023 - 19:50:26
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Mining News Pro - Global investment management firm Goldman Sachs has slashed its iron ore price forecast by 18 per cent, citing weakened global demand.
The iron ore price has been downgraded to $US90 a tonne, down from $US110.
Goldman flagged risks of China’s oversupply in steel becoming increasingly evident, as output targets could be trimmed. A slower recovery rate in property sales saw demand for steel fall by five per cent.
The weakened demand in China may result in a surplus of iron ore, prompting Goldman to revise the iron ore demand to “flat”.
Goldman said that 2023 was the first full year of global surplus in iron ore since 2018 and could be followed by an even larger surplus in 2024.
The Australian Financial Review (AFR) reported that the share price for Fortescue Metals dropped 8.2 per cent on average in May, while BHP and Rio Tinto fell down 0.9 per cent and 0.2 per cent respectively.
In April this year, Fitch Solutions increased its 2023 iron ore price forecast from an average of $US110/t to $US125/t amid improving market sentiment.
“On the demand side, we expect Chinese demand to continue with its promising momentum over the rest of 2023,” Fitch said. “China will be the main driver of demand recovery, while other regions will struggle with lingering issues from 2022.
“However, China’s increase in demand may not translate to rallying prices due to its centralised iron ore purchaser China Mineral Resources Group (CMRG). The entity aims to exert Chinese influence over critical mineral imports like iron ore, putting limitations on price upside.”
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