financial forecasts on lower iron ore prices, page-25

For those who are JP Morgan and iron ore fans. JPM think iron ore is about to jump !!!

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CHART OF THE DAY: The Great Iron Ore Crash Of 2012

(http://www.businessinsider.com/chart-of-the-day-iron-ore-is-getting-destroyed-2012-8?nr_email_referer=1&utm_source=Triggermail&utm_medium=email&utm_term=Money%20Game%20Chart%20Of%20The%20Day&utm_campaign=Moneygame_COTD_082912)

Iron ore futures collapsed today, falling 6.7 percent. It's a major component of steel and as such is viewed as one indicator of economic health in China.

As you can see from the charts below, it's been getting crushed for a while. It's at its lowest levels since 2009.

However, JPMorgan analyst Alessandro Abate thinks iron ore is poised for a turnaround. In a note to clients this morning, he writes:

Iron ore spot price: catalysts heading towards a reversal of spot price trend in September. Reasons: 1) recent iron ore spot price decline ($40/t in July/Aug), due to traders’ destocking on high inventory level and lagged recovery of Chinese steel demand; 2) current spot price implies a further reduction of Chinese domestic iron ore output (July at 115mt -8% m/m) going forward, in our view with 3) little sense for traders’ ‘selling frenzy’ at current iron ore spot price; as 4) cut of domestic Chinese steel output (705-710mt Aug annualized, with likely further downside going forward) likely to hit domestic miners and benefit iron ore seaborne traders (shift of demand away from expensive domestic miners’ output).