Iron Ore Seen at $120 a Ton on China Stimulus, Mitsui Says
China’s government stimulus and a projected increase in steel output will support iron ore prices at about $120 a metric ton next year, said Masami Iijima, chief executive officer of Japan’s biggest trader in the raw material.
“I think we saw the floor of it in the second quarter” ending Sept. 30, Iijima of Mitsui & Co. said at a briefing in Tokyo today. “Europe’s debt crisis is having an impact on Chinese exports. But, if the stimulus works we’ll see an upward trend in steel product prices.”
Iijima said China’s 1 trillion yuan ($160 billion) in state spending announced in September means the steelmaking material is unlikely to drop below $100 a ton.
The outlook from Mitsui, which earns about half its net income from iron ore, comes after iron ore prices in China fell 42 percent to $86.7 a ton on Sept. 5 from an April peak.
The iron ore price for Chinese imports at the port of Tianjin has since recovered to $120.1 as of Nov. 2, according to The Steel Index Ltd. Prices are set to fall for four consecutive years from 2014, according to a Bloomberg survey of five analysts, and may average $96 a ton in 2017.
Mitsui will seek to boost investments in agriculture, especially in fertilizers, as a way to diversify from iron ore, Iijima said. Mining potash and phosphate, two of the three main fertilizer materials, are most attractive for Mitsui, he said.
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