FMG (ASX) Global Iron Ore &amp; Steel Forecast Conference

Originally posted by Barkston ↑

Further commentary provided at the conference. While both BHP and Rio have backed away from a McKinsey lead view of Chinese steel peaking over 1Bt, their views still exceed most others.

From the AFR:

The China Iron and Steel Association has painted a challenging picture for Australia's iron ore producers, arguing Chinese steel demand has entered an "era of reduction" and will decline in 2017.

CISA represents China's biggest state-owned steel mills and generates forecasts used by Beijing to help formulate its five-year plans. Speaking at an iron ore conference in Perth on Thursday, CISA vice president LiXinchuang said China's steel industry had transitioned from a period of expansion to an "era of reduction" which would see the country's steel demand decline 1.9 per cent in 2017 to 660 milliontonnes.Mr Li, who is also the head of China's top planning body for its metals industries, the China Metallurgical Industry Planning and Research Institute, has long-clashed with iron ore heavyweights BHP Billiton and Rio Tinto over their forecasts that Chinese steel production will continue to grow.

CISA argues China reached peak steel consumption in 2014 at 702 million tonnes and, despite a slight increase in 2016, it would gradually decline to about 490 million tonnes by 2030. "We think Chinese steel production will decrease step by step," Mr Li said. "How much gross steel we can produce will depend how much we can export." China is working to remove overcapacity in its steel industry to improve performance, which Mr Li said was already showing some "positive results" with a return to profitability but "still has a long way to go". CISA forecasts another 50 million tonnes of steelmaking capacity to be removed in 2017.

But despite the reductions, Mr Li said the Chinese market would still require large volumes of iron ore which would be served mainly by imported "seaborne" ore.

The CISA official said the iron ore market would remain in oversupply as seaborne producers ramped up volumes and higher iron ore prices lured Chinese domestic iron ore producers back into themarket.b "Last year it [Chinese domestic iron ore production] decreased about 3 per cent, that is the general situation," he told the conference." But unfortunately with the very fast increase in the iron ore price … Chinese iron ore production increased about 15 per cent in the first two months [of 2017]. "What is the future? We are thinking the global supply of iron ore is very serious for the long-term."

CISA expects the iron ore price to be volatile in a range of $US55 per tonne to $US90 per tonne in 2017 but average about $US65 a tonne for the year. The spot iron ore price was $US82.85 on Wednesday. Despite almost all other forecasts in the industry saying peak production has passed, BHP and Rio still expect Chinese steel production to grow. BHP has reined in its forecast to Chinese steel production rising to 935 to 985 million tonnes in the mid-2020s, while Rio Tinto has said a peak of 1 billion tonnes before 2030 is no longer its central scenario.

Expand

So with all this what price can we see iron ore go to this year, A high and a low estimate from now till end '17 ?

No.	Vol.	Price($)
6	473	$21.76

No.

Vol.

Price($)

473

$21.76

Price($)	Vol.	No.
$21.77	977	9

Price($)

Vol.

No.

$21.77

977

No.	Vol.	Price($)
10	3296	21.780
12	2658	21.770
12	2720	21.760
14	6344	21.750
15	5183	21.740

No.

Vol.

Price($)

3296

21.780

2658

21.770

2720

21.760

6344

21.750

5183

21.740

Price($)	Vol.	No.
21.790	330	3
21.800	7233	9
21.810	2334	8
21.820	2359	7
21.830	2376	6

Price($)

Vol.

No.

21.790

330

21.800

7233

21.810

2334

21.820

2359

21.830

2376

(20min delay)
Last $21.77		Change -0.090(0.41%)		Mkt cap ! $67.30B

Open	High	Low	Value	Volume
$21.71	$21.80	$21.67	$10.86M	498.5K

Global Iron Ore & Steel Forecast Conference, page-29

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Global Iron Ore & Steel Forecast Conference, page-29

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