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Global Deflation Alert—-Even Goldman Takes Axe To Iron Ore Forecast, Industry In Hibernation
davidstockmanscontracorner.com / By Jasmine Ng at Bloomberg /
Goldman Sachs Group Inc. took the ax to its iron ore forecasts, predicting the price will remain under $40 a ton for the next three years as China’s slowdown forces the global industry into a long period of hibernation.
Iron ore will average $38 a metric ton next year and $35 in both 2017 and 2018, analysts Christian Lelong and Amber Cai wrote in a report received on Thursday. The new forecasts are 13 percent to 14 percent lower than the bank’s previous outlook.
Iron ore has been pummeled this year as surging output from the largest miners including Rio Tinto Group and BHP Billiton Ltd. in Australia and Brazil’s Vale SA combined with weaker demand in China to produce a glut. Goldman Sachs said it expected mine closures to accelerate next year as the health of China’s steel industry deteriorates. The bank raised the prospect that by 2040, China’s iron ore demand may contract by 50 percent as steel consumption drops and more scrap gets used with greater recycling.
“The iron ore sector may have to hibernate for an extended period before alternative steel markets in other regions take over from China and usher in the next bull market,” Lelong and Cai wrote, adding that prices had reached the bank’s $40 forecast one year ahead of schedule. At present, China makes about half of the world’s steel.
The post Global Deflation Alert—-Even Goldman Takes Axe To Iron Ore Forecast, Industry In Hibernation appeared first on Silver For The People.
Source: http://silveristhenew.com/2015/12/17/global-deflation-alert-even-goldman-takes-axe-to-iron-ore-forecast-industry-in-hibernation/
