Via Bloomberg
The view of the Australian Gov't in their latest quarterly review is that Iron ore prices are set to fall in 2020 by a considerable amount.
Why listen to the Aussies on Iron Ore?
Australia is the No 1 exporter and export 50% of the world's Iron Ore exports with 29% of the world's Iron Ore reserves. Ok, enough said.
So, what's their thinking?
Their thinking is that:
- Global trade seen surging 54 million tonnes a year, but Chinese imports (the No 1 customer) are set to rise only by 1 million tonnes
- The high Iron Ore price of 2019 was supported by production shortfalls in Brazil (the No 2 exporter hit by the Vale Dam crisis) and Australia (see chart below) and production should pick up in 2020.
They project a $63 a ton Iron Ore price in 2020, but are not expecting an instant sell off. Check out their reports here.
The Aussies are not the only ones saying this
- Citigroup expect Iron ore to fall in 2020, but don't expect a sudden collapse due to issues around Brazil's supply recovery
- Morgan Stanley expect prices to remain elevated in early 2020, but decline through the year as the least favoured commodity of 2020.
