Contract iron ore prices, at a record after six years of gains, may decline 30 per cent next year amid falling steel production and a slump in cash prices, JPMorgan Chase & Co. said.
Prices for benchmark Australian ore for the year starting April 1 may drop to 101.27 US cents per dry tonne unit, JPMorgan Chase & Co. analysts led by Rodolfo De Angele said in a November 19 report. The bank previously forecast a 10 percent decline from this year’s contract price of 144.66 cents, or about $92 a tonne, according to Bloomberg calculations.
“Global steel demand has dropped abruptly in the last two months, driving a deluge of production cuts,” JPMorgan said. “This, coupled with high inventories in China and falling freight rates, has led spot prices to drop 14 to 24 percent below contract prices, which we believe should set the tone for lower prices in 2009.”
Goldman Sachs JBWere Pty, Macquarie Group Ltd., RBC Capital Markets and Australia and New Zealand Banking Group Ltd. have all cut iron ore price forecasts this week.