Iron ore, coal prices to keep rising: GSJBW Wednesday, 30 May...

Iron ore, coal prices to keep rising: GSJBW

Wednesday, 30 May 2007
Paul Garvey

THE next round of iron ore price negotiations may still be six months away but analysts at Goldman Sachs JBWere have already upped their expectations of another price increase for 2008.




GSJBW, which had already been predicting a 5% rise in the price of iron ore next year, said yesterday that continuing strong demand and tight supply would help push iron ore prices even higher.

The group now expects the iron ore price to climb a further 9% during the next round of negotiations.

Another increase in the price of iron ore would mark the commodity's sixth consecutive year of increases.

The price of iron ore rose 10% for 2003 deliveries, 18.6% for 2004, 71.5% for 2005, and 19% for 2006.

The latest round of negotiations ended late last year with a 9.5% rise.

GSJBW also improved its outlook for metallurgical coal, with the group now tipping the price of coal to rise rather than fall next year.

"We are still six months away from the start of annual contract negotiations (and possibly a year away from any settlements!) but with no evidence of any slowdown in demand (China for iron ore, India for coking coal) and no 'quick fix' to the logistical bottlenecks afflicting suppliers, we believe the market will remain in 'bulk upgrade mode' as we approach contract negotiations," GSJBW said.