According to Macquarie Group Ltd, iron ore prices for immediate delivery may fall to below USD 150 a tonne in the second half from about USD 175 now on rising output of the raw material and concern over demand from China,
Mr Jim Lennon a commodities analyst at Macquarie said that “In the second half, we may get more supply coming on and demand from steelmakers in China and elsewhere may stabilize or fall slightly.”
Macquarie said that mining companies are seeking to capitalize on market prices for the steelmaking ingredient that more than doubled in the past year.
Mr MrLennon said that the drop in so called spot prices would affect quarterly contracts negotiated between iron ore producers and steel mills by the end of the year.
He added that “There’s a lagged element the current spot price only gets reflected in the pricing three months later. There was an extreme shortage of iron ore in the first and second quarters of this year that’s why the prices went up so much.”