Iron ore @ $150 justifiable - BofA, page-2

There are so many contributing factors to the underlying Iron Ore price and about 80% of them are in favor of a rise.

Couple factors that may increase IO prices over the year:
- increasing coal and oil prices
- infrastructure increasing worldwide (will increase more if war happens)
- Russia & Ukraine account for 8% of the worlds iron ore, now in deficit
- chinese government has dialed back carbon ambitions for the sector
- Freight rates, the cost of which is typically carved out of a company’s realised iron ore price by the purchaser, have also subsided to normal levels.
- Macquarie says it expects infrastructure spending to pick up (bullish for steel demand) after China set its economic targets for 2022 at the National People’s Congress this week, with steel mill margins in China rising sharply in recent weeks.
- Japan’s Nippon Steel said at the weekend that it is considering how it might need to adjust its supply lines, given 14 per cent of the high-grade iron ore pellets that Japan imports come from Ukraine.
- Adding to the bull case are supply risks. The Ukraine conflict is one, but so is the reopening of the West Australian border and a potential spike of COVID-19 cases in the Pilbara. Brazilian iron ore shipments were also soft last week