...BHP peaked at $50 as predicted by this thread, and not likely...

...BHP peaked at $50 as predicted by this thread, and not likely to revisit that level anytime soon or possibly for some time to come.

Iron ore could collapse 30pc as Rio Tinto floods market
Alex GluyasMarkets reporter
Jan 20, 2025 – 11.49am

Westpac has warned that iron ore prices could collapse 30 per cent this year to about $US70 a tonne when Rio Tinto floods the market with fresh supply, deflating hopes of a sustained rebound for Australia’s key export.

The spot price of iron ore rallied nearly 7 per cent last week to $US104.15 a tonne after robust Chinese trade data bolstered hopes that Beijing’s stimulus measures were lifting steel demand.

The closure of Port Hedland temporarily disrupted iron ore supply.
The data – which showed annual imports of the steel-making ingredient at a record – coincided with supply disruptions at Australia’s largest iron ore export hub Port Hedland, which closed over the weekend due to a tropical cyclone developing offshore of the Pilbara region of Western Australia.

The port reopened on Monday after the national weather bureau advised that a severe tropical cyclone was moving away from the Pilbara.

Westpac predicted that iron ore would continue to push higher above the key $US100 a tonne level over the coming weeks, boosted by stronger steel production into the end of last year and signs of restocking ahead of the Lunar New Year holiday on January 29.


However, the big four bank also warned that any rally would be capped between $US105 and $US110 a tonne given inventory levels were already close to record highs despite more supply coming online this year.

Rio Tinto is expected to start production at its 25-million-tonne-a-year Western Range project in the Pilbara in the first half of 2025, while first ore at the company’s Simandou project – the largest to be commissioned since Vale’s S11D in 2016 – is scheduled for later this year.

“We see prices weakening as we move through 2025, with the potential for low $US70s to be seen late this year,” said Westpac’s head of commodity strategy Robert Rennie.

Goldman Sachs also argued that last week’s rally in iron ore prices was driven by sentiment about China rather than fundamentals, which have actually loosened over the past week.

Visible iron ore stockpiles at Chinese ports increased by 2 million tonnes and are up 10 per cent year-to-date compared to the same period in 2024.

Goldman believes that trend will intensify over the next two years, forecasting Chinese port stockpiles to increase by 18 million tonnes in 2025 and 41 million tonnes in 2026.

The build-up would be “the biggest drag on iron ore prices from the fourth quarter of 2024 onward”, said Goldman commodity strategist Aurelia Waltham.

The broker is bearish on the outlook for Australia’s key export, tipping prices would drop to $US95 a tonne this year and $US90 a tonne in 2026.

The depreciation of the Chinese yuan will remain the biggest drag on prices in the near term, according to Goldman, which expects the currency to experience a sharp move lower after US President-elect Donald Trump announces sweeping tariffs.

Mr Trump’s threat to implement a 60 per cent tariff on Chinese goods has forced countries to front-load exports, supporting steel and iron ore consumption in the world’s second-largest economy.

But Goldman said the current pace of growth was unsustainable and predicted new property starts in China would decline this year and in 2026. New property starts are the most significant indicator for steel demand from the sector.

Glass half full

Morgan Stanley is more optimistic, noting that 2025 was shaping up differently from the oversupplied conditions experienced last year as disruptive weather hits supply and depletion kicks in.

“This clears the way for decent price performance over the remaining 12-month window before Simandou’s entrance,” said Morgan Stanley equity strategist Chris Nicol.

While iron ore prices have been resilient so far this year, the major mining stocks are mostly flat as financial markets await further clues on China’s support package.

Citi recently advised clients to resist buying the ASX’s mining behemoths despite their cheap valuations because the sector would be hit by subdued global economic growth and softening commodity prices this year

“The performance of iron ore and related equities over the last few weeks suggest that investors, whilst on high alert for any China policy pivot, are quite prepared to wait to buy the fact rather than anticipate more effective policy,” Mr Nicol said.

Commonwealth Bank is expecting policymakers to deploy more stimulus at China’s Two Sessions policy meetings in March, especially if Mr Trump’s promised tariffs are implemented in full and consumption fails to rebound.