Iron ore prices will face “downward pressure” in the next three months because of increasing supply from Brazil and weakening global steel demand, Standard Chartered Plc said.
There is also a risk of iron ore destocking in China, Standard Chartered analyst Judy Zhu wrote in a report dated today. Spot iron ore, Indian origin, will be $170 a metric ton in the third quarter compared with $175 a ton in the second quarter, according to the report.
“Softer steel markets in many regions have negatively impacted market sentiment,” Zhu wrote. “We expect modest declines in spot iron-ore prices in the next three months as Brazil’s exports recover further and demand enters the off-peak season with the start of the summer holidays in Europe and the U.S.”
China, the world’s biggest consumer of iron ore to make steel, produced about 47 percent of the world’s output of the metal in April, according to the World Steel Association. Production may fall from next month as the country rations power, forcing mills to reduce manufacturing, RS Platou Markets AS in Oslo said on May 25.
Vale SA, the world’s biggest iron ore producer, is based in Rio de Janeiro.