Economics
Iron Ore Rally Starts to Crack as Capital Economics Sees $45
- Benchmark prices dropped 5% this week amid China concerns
- Futures enter corrections with 10% declines from recent highs
Deutsche Economist Says Iron Ore at $90 Is Near Forecasts
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Iron ore’s rally is showing signs of cracking. After a drumbeat of warnings that the gains won’t last, the commodity posted the biggest weekly slump in almost four months amid rising concern about the underlying strength of demand in China at a time of still-rising supplies.
The surge “was premised on optimism about demand,” Caroline Bain, chief commodities economist at Capital Economics Ltd., said in an email. “As such, we think the recent decline reflects some doubts about China’s demand.” Bain’s predicting a retreat to $45 a metric ton by year-end, 48 percent lower than Friday’s price, and levels last seen in February 2016.