ANZ Lift Short-Term Price Forecast, But Expect Pullback By End ‘23

ANZ note that “China’s reopening and more supportive policy measures bode well for the steel and iron ore markets. However, the impact may be short lived amid ongoing underlying issues in China’s property market.”

• “The first concrete sign of an increase in China’s industrial activity emerged this week, with the manufacturing PMI rising to its highest level since 2012. Policy designed to support the property sector boosted sentiment in the steel industry. Steel inventories are low, and margins are improving, which should strengthen near-term steel output. On the supply side, weather and operational issues this year have stifled Australian and Brazilian iron ore exports.”
• “This combination of conditions, however, is likely to be short lived. The support for the property sector is not expected to lead to a boom in new construction. And we expect supply side issues to ease over the year.”
• “We have raised our short-term target for iron ore to USD130/t, but see prices pushing back below USD100/t by the end of the year.”