Iron Ore Prices Will Move Forward: Lennox

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June 23 (Bloomberg) –- Fat Prophets Resource Analyst David Lennox discusses the iron ore market and the outlook for commodities with Angie Lau on Bloomberg Television’s “First Up.” (Source: Bloomberg)

Les to the outlook for commodities.

Our guest joins us from sydney.

David, good to see you.

We are seeing some of the pressure lesson with iron ore prices today but overall the trend has been pretty worrisome.

Over the last six months, we have seen the iron ore price, let's call it a minor collapse through the last six months.

Primarily because investors have been concerned about the china story and how the growth in that country is going to be either maintained or a slip over the next 12 months.

And also related to that is the steel story.

Both of those are integral to what the direction i and or prices will move and both of those stories have been very unfortunately.

Within the iron ore prices react accordingly.

We are expecting they'll flash data to come out.

See them little bit of a pickup from the previous month.

Is that a good sign?

We are still in contraction mode.

That is certainly a good sign.

Markets will be looking for some a data that show with the chinese economy and the chinese industrial bases is starting to stabilize and we do and that going forward, it is going to be one of the real key stories.

China has got the policies in place, height interest, the reserves it can used to simulate.

It has the policies to move its economy if it needs to.

That is what the investors will be looking for in the next three or four months.

No doubt.

February seemed so long ago when our ore prices were at 158 .90. and a peaked announced slipping the low the $90 range.

How long do you think it will stay around this range?

Look, i guess we are quite comfortable and we will keep our 135 end of the price range.

It is quite a rally.

We do think that while the market's concerned about surplus coming into the market of iron ore the next 12 months, the price will stay a little under pressure.

We have the opposite of you and think china has 880 million tons last year and that is a record.

We think going forward, if it grows at 8%, we are still looking at 40 million tons that china will be needing through next year.

We think that should put some support.

The other side of the equation is the levels we are seeing in china.

These are beyond 100 million tons.

The quality of the iron or is a little suspicious and would've already heard that various producers and players in the markets are starting to discount prices because they cannot find a suitable steel mills to take iron ore off their hands.

The prices will certainly moving forward.

And they are preferring the quality iron ore out of australia.

These prices also shake out the poor quality, smaller chinese iron ore producers as well.

That helps provide a lot, no?

Oh yes it does.

We think domestic reduction is probably 900 million times.

The country is moving to consolidate its iron ore production.

That is to prolong the reserves and we think they have about 20 years of reserves.

And the quality iron or, it is somewhat more expensive to attract and is focused on so that country can get access to its domestic supply.

That will happen over the next four years.

Between now and then, we think australian supplies can increase

This text has been automatically generated. It may not be 100% accurate.

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