Goldman Sachs Revises Higher Iron Ore Price Outlook

The US bank weighs in on the iron ore price outlook, given resilient price performance so far in 2023, see below for more details.

• "Disappearing glut risk. For much of 2023, iron ore has been seen as the China commodity property short. Yet, the commodity’s fundamental and price resilience has defied these expectations. Indeed, rather than facing a surplus for this year (previous 9Mt surplus), the iron ore market is now set for a clear deficit (GSe 39Mt deficit). Whilst China’s steel demand remained in clear contraction, the feedthrough into iron ore demand has been limited by outperforming steel production underpinned by a lack of (expected) policy cuts, sustained steel export strength and restrained scrap-based EAF output. Set against disappointing iron ore supply trends from both Australia and Brazil, alongside low supply chain stocks, the market has supported higher prices than earlier expected. The path into 2024 now points to a balanced market versus previous surplus, suggesting no imminent glut risk ahead. With onshore mill restocking likely ahead of Chinese New Year and low supply chain inventories, price resilience with greater risk to the upside than downside is now the year-end setting. In this context, we revise our full year average 62% iron ore forecast for 2023 to $117/t (from $101/t) and for 2024 to $110/t (from $90/t), with our new 3/6M targets of $130/120/t signaling modest upside relative to the forward curve pricing."