The Commonwealth Bank of Australia has raised its fiscal 2018-2019 iron ore price forecast for 62% Fe iron ore fines, on views that demand for mid-grade iron ore will increase as high-grade premium proves too costly, it said Tuesday in a report.
CBA analysts are now expecting the 62% Fe iron ore fines price to average at $61/mt CFR China in the 12 months to June 30, 2019, which is up 9% from its previous expectation of $56/mt, it said in its Commodities: Strategy report.
“Our slight upgrade over the next few quarters reflects the recent strength in the 62% Fe benchmark and evidence that some mills are looking to purchase mid-grades again,” CBA said.
Despite the near-term upgrade to prices, CBA still sees a decrease in value in the longer term.
“While the high grade premium has just spiked, the mid-grade premium has continued to ebb sideways. The stability in the mid-grade premium may mean that we are at sustainable levels in the low grade market,” it said.
“However, it appears that the high grade market needs more time to find a sustainable level. We think that level is likely lower than where we are today,” it added.
CBA forecasts that the 62% Fe iron ore fines price will average at $53/mt in fiscal 2019-2020 and $46/mt in the longer term. That compares to $69/mt in the past fiscal year.
Source: PlattsPrevious Next