Demand Slows for Iron Ore This Year

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Demand Slows for Iron Ore This Year
Demand Slows for Iron Ore This Year

Demand Slows for Iron Ore This Year

Westpac Banking Corp. (WBC) in its report says that iron ore will probably drop 19 percent by the end of the year. According to the organization it is happening as demand has gone down; however, there is no shortage of iron ore in the market. In a similar fashion, Goldman Sachs Group Inc. also gave a prediction and said that the iron ore prices are going down further.

According to various sources iron ore may fall to $110 a ton by the end of 2013. Some other market observers believe that prices may rebound to about $140 a ton in mid-2014 before dropping back to $110 in September. Thus, in all probabilities, it looks like the market will be slow for most of 2014.

Earlier, in its prediction Goldman Sachs Group came up with the idea that the steelmaking ingredient was among commodities that may decline at least 15 percent next year may further be a concerning factor for investors. Additionally, though iron ore climbed to a two-month high on Nov. 6 as China, the biggest buyer, after stockpiles rose to the highest level in a year, it fell.

According to some organizations like Goldman Sachs Group and UBS AG, there has been a growth in the supply levels, particularly, from Australian producers which is pushing the seaborne market into a surplus, and that is a major reason that the iron ore prices are falling apart.

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Similarly, according to them another major reason seems that the pace of China’s economic growth may slow to 7.4 percent in 2014 from 7.6 percent this year. China has been a major importer of iron ore; however, as the national economy of the communist country slows down, it won’t need more iron ore and that may impact the prices.

Earlier, Goldman Sachs Group had predicted that that price will average $130 a ton this quarter. In a similar fashion, it had predicted that it will fall to $117 a ton in the first quarter of 2014. Interestingly enough it was $133 on Sept. 30. Thus, in the first quarter next year it will be similar to what was in the third quarter this year.

According to reports Australia, the biggest exporter of iron ore will swell the global surplus. Rio Tinto Group is also expected to continue demand for raw materials. Similarly, Fortescue Metals Group Ltd. (FMG) is tripling its capacity, thus, it too will need large quantities of iron ore by the end of the next year.

To contact the reporter of this story: Jonathan Millet at john@forexminute.com