Crickey I was only joking this morning I didn't expect to be taken seriously
China talking it down to minimise the pain to the hip pocket.
We already have our own analysts doing that.
Average $65 for the year is still mighty good profits for AGO.
http://www.copyright link/business/...beat-view-of-iron-ore-outlook-20170222-guiv1y
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The iron ore price boom won't last. That was the downbeat message from China's chief government forecaster and the steel industry's main lobby group on Wednesday, even as
the iron ore price surged towards a three-year high of $US95 a tonne.
"The future is kind of pessimistic," said Frank Zhong, the chief representative of the World Steel Association in Beijing.
His mixed outlook was matched by Beijing's top forecaster, which said the iron ore price would remain strong in the first half, before falling away towards year's end.
"We see an average price of $US65 a tonne for this year," said Lv Zhenhua from the China Metallurgical Industry Planning and Research Institute.
He said this forecast implied the price would move as low as $US55 a tonne at points during the year, a level at which Australia's big three iron ore miners would still be highly profitable given their costs are below $US20 a tonne.
This cautious outlook appears to confirm the Australian government's view that the recent iron ore price surge was unsustainable and not a long term solution to repair the federal budget.
The big miners agree. While rising prices buoyed the results of
BHP Billiton, Rio Tinto and
Fortescue Metals Group, there are fears inside the big mining houses that the current restocking phase in both the iron ore and steel markets will soon end, dampening demand in the coming months and pushing down prices.
The downbeat message delivered by the opening two speakers at the Metal Bulletin China Iron Ore Conference, held in the port city of Dalian, was in stark contrast to the upbeat mood in the packed room.
"Iron ore traders are very bullish that China's peak construction season in April and May will be a strong one this year," said one participant who asked not to be named.
"They think infrastructure spending will carry the market through for the rest of the year."
That positive outlook was dampened by Mr Lv who said steel demand in China was falling and the government's 2017 target for production cuts would likely be higher than last year.
"Demand [for steel] is weakening in China and no other country can replace that demand in the short term," he said.
He forecast China's overall steel demand to fall 1.8 per cent in 2017 to 660 million tonnes and said steel exports would be flat at around 100 million tonnes.
Mr Lv's government-backed institute is often more pessimistic than the market, but few in the room would have expected such a downbeat assessment from the industry's main global lobby group.
But Mr Zhong from the World Steel Association indicated China's overall steel demand would fall sharply over the next decade in line with the experience of Japan, German and the United States.
"The story is not all bright and shiny," he said.
He said China's rate of urbanisation, car use, building of transport infrastructure and property construction were all slowing, while the much heralded "One Belt One Road" project would not deliver any meaningful boost to steel demand.
He indicated China's steel consumption would fall below 600 million tonnes by 2020, 20 per cent lower than its 2013 peak. This suggests steel consumption will fall a further 9 per cent from the forecast 660 million tonnes this year.
"The trend for steel demand in China is very similar to the US, Japan and Germany .... peak then a sharp decline," he said.
Mr Zhong flagged China's steel demand intensity per unit of GDP was "entering a period of decline" from its current level of around 80kg.
"Japan is at 10kg, so the room for further decreasing the intensity is huge," he said.
Mr Zhong also exploded the idea Chinese car ownership would move substantially higher from its current level of around 110 cars per thousand people, compared to 786 per thousand in the US.
"Is the potential for China still big .... I don't think so," he said.
He cited car sharing and environmental restrictions as the main reasons why China's car ownership would not reach levels seen in developed countries, while saying the use of lighter weight materials in car making would lower the steel intensity of the auto sector in China.
