Iron ore prices climbed again Tuesday to $61.75 a tonne, just off a four-month high, taking this year’s gains to more than 40% to date.
The spot price for benchmark 62% fines added 52 cents overnight, according to The Metal Bulletin, on increased activity and strength in the steel market.
But the bonanza should soon be over, say analysts led by investment bank Citi, which warns that current prices are simply not sustainable.
“There are short- to medium-term risks in iron ore and coal as the impact of Chinese stimulus that has boosted the 2016 year to date abates,” Citi analysts wrote in a research note, quoted by Bloomberg.
Despite calling it a "darling" of commodities so far this year, they noted that falling demand, coupled with increasing mine supply, would probably hurt iron ore prices thereafter.
As such, Citi believes the steel-making ingredient will average $51 a tonne in the final quarter of the year and $45 in 2017.
Their view is backed by BHP Billiton (ASX, NYSE:BHP) (LON:BLT), the world’s largest mining company and the No.3 iron ore producer, which has repeatedly said prices for the commodity willremain low for at least another ten years due to oversupply.
Source: Mining.com
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