Free Trial

Goldman: Global Steel Softness Swings Iron Ore Into Glut

METALS

Goldman Sachs note that “the iron ore market is set to swing into significant surplus over the second half of this year. We now project the market to be in a 67Mt surplus over the remainder of 2022 (vs. 34Mt previously) after a 56Mt deficit in H1. Crucially, this sharp swing into oversupply reflects a combination of both extended property related onshore demand weakness and a sharp deceleration in ex-China steel demand, compounded by a largely unchanged supply path. The market is currently absorbing steel production cuts in China, Europe and Japan as well as mill destocking and the resale of contracted volumes, resulting in a material reduction in spot physical liquidity. Given more organic end demand headwinds than a year ago and so far limited supply adjustments, this surplus swing is unlikely to be as short-lived as last year's. In this context, we see a more severe downturn in iron price over the rest of this year, adjusting our 3- & 6-month targets to $70/85/t from $90/110/t previously. We now forecast the benchmark 62% iron ore contract to average $85/t over H2 this year (vs. $100/t previously).”

MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.