Iron Ore to Tumble on ‘Whopping Oversupply,’ Citigroup Says Share | Email | Print | A A A
By Jason Scott
March 24 (Bloomberg) -- Contract iron ore prices will drop for two years, undermined by a “whopping oversupply” of the steelmaking raw material, Citigroup Inc. said.
Global demand may decline 7.5 percent this year, while supply rises 7 percent, Citigroup analyst Alan Heap told a conference in Perth, Australia. Contract iron ore prices may drop 30 percent this year and 20 percent in 2010, he said.
Steelmakers in Asia and Europe are slashing production and cutting jobs as the global economic slowdown curbs demand from builders and carmakers. Prices of hot-rolled coil, an industry benchmark, have more than halved since June to $505 a metric ton, according to U.K. industry publication Metal Bulletin.
Iron ore producers, including BHP Billiton Ltd., the world’s largest mining company, and Rio Tinto Group, the second- largest iron ore producer, are negotiating annual benchmark contract prices with steelmakers for the year starting April 1.
To contact the reporter on this story: Jason Scott in Perth at [email protected].
Last Updated: March 23, 2009 21:39 EDT
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