Iron ore price, page-43663

Fitch Solutions joins iron ore price upgrade clubStuart McKinnonhttps://thewest.com.au/business/mining/fitch-solutions-joins-iron-ore-price-upgrade-club-c-5778892The West AustralianMonday 21st February Fitch Solutions has dramatically revised up its iron ore price forecasts for the next two years, noting renewed economic stimulus by the Chinese government targeted towards the infrastructure sector.The research arm of the global ratings agency has lifted its iron ore price forecast for 2022 from $US90 a tonne to $US120/t and its prediction for 2023 from $US75/t to $US110/t.“Chinese demand has once again started picking up, and will remain strong in 2022-2023 with the government’s renewed stimulus towards the infrastructure sector in the face of slowing economic growth,” Fitch said.“On the supply side, we do not expect any significant increase in iron ore supply from major producers who will place an emphasis on value over volume in 2022, and this is added to high supply risks over weather issues and continued COVID-19 operational disruptions.”Fitch is the latest financial institution to raise its iron ore price forecasts for 2022, joining JP Morgan and Macquarie which also raised their expectations this month.After hitting a record $US230/t in May, the iron ore price tumbled rapidly to less than $US90/t in November but then rose again quickly to nearly $US150/t this month. It has softened in recent days to $US136/t.Fitch said the recent price softness in iron ore had been caused by a Chinese government crackdown on speculative trading in the steel-making commodity but the weakness would only be temporary because of ongoing supply constraints and renewed demand.“On the demand side, we are now turning more positive towards Chinese demand for iron ore following a number of developments,” Fitch said.“First, and most importantly, China seems to be looking at increasing its financial support to the economy in 2022, amidst weakening economic growth prospects driven by real estate sector weakness and strict COVID-19-related lockdowns.“The Chinese government announced on January 25 that Beijing will set a reasonable annual quota for local government bonds to boost infrastructure investment in 2022, which will be very supportive for iron ore demand and prices.”However, Fitch retained its bearish outlook for iron ore over the longer term, forecasting a multi-year downtrend after 2022 to $US50/t by 2031.