Goldman Sachs Lowers Iron Ore Price Forecast to $85 per Ton Amid Global Oversupply Concerns
Goldman Sachs analysts have revised their price forecast for the fourth quarter of 2024, lowering it to $85 per ton from $100 per ton. This adjustment comes as concerns over an oversupply in the global iron ore market continue to grow, with strong shipments and weakening demand from China exacerbating the situation.
The recent drop in the 62% Fe iron ore spot price to a nearly two-year low of $90 per ton reflects a 20% decline since July 2024. Despite this, global iron ore supply remains robust, with daily shipments running 2% higher than the same period last year, leading to a surplus in the market.
Goldman Sachs analysts warn that without significant supply cuts, the market will remain imbalanced, putting further downward pressure on prices. They suggest that prices may need to fall even further to around $80 per ton to eliminate excess supply from India and other marginal producers.
While Chinese iron ore consumption has shown signs of stabilization, overall demand remains subdued due to a weak macroeconomic outlook for China. Chinese steel production, closely tied to iron ore demand, faces risks as steel exports potentially threaten to depress demand further.
In the near term, Chinese steel mills may engage in restocking ahead of the “Golden Week” holiday in early October, providing temporary support for iron ore prices. However, this restocking is unlikely to offset the broader surplus in the market.
In conclusion, the global iron ore market is facing challenges due to oversupply and weakening demand, leading to downward pressure on prices. Investors and stakeholders should monitor the situation closely and consider the potential impact on their finances and investments.