Analysts believe iron ore prices could now remain near $US100 for months ahead.
Westpac Bank’s commodity team,in a note on the sector,said China’s steel mill stockpiles have jumped to their highest level since February last year,above seasonal averages,and iron ore port inventory has risen in 11 of past 12 weeks,up 30 per cent from September.
The bank is forecasting iron ore prices will fall below $US100 a tonne between July and September and may slide below $US90 in the final quarter of this year.
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The value of iron ore,Australia’s largest export and a billion-dollar earner for the federal government,plunged 29 per cent from 18-month highs above $US140 a tonne in January before recovering slightly to around $US111 now,a dramatic slump that creates uncertainty for the country’s big miners.
China mills more than half the world’s crude steel and is exporting record amounts as it grapples with a sustained building and housing development crisis that earlier this month prompted the country’s Housing and Urban-Rural Development Minister,Ni Hong,to reiterate that “housing is for living in,not for speculation”.
Morningstar commodity analyst Jon Mills said markets were expecting China’s leaders to offer more support for the property sector at the National People’s Congress earlier this month. “I think everyone’s been disappointed,” Mills said.