Dow Jones reported that global iron ore prices may drop a moderate 20% in the 2009 contract year but a collapse of the market is unlikely despite the current pessimism in the industry.
It quoted Mr Alexander Molyneux head of Asian metals and mining for Citigroup as saying that "We are generally quite robust on commodities. We think this crisis will be a 12 to 18 month thing. By the time negotiations are completed next year the excess stock situation would have been taken care of, which will put some of the tension back in the market."
Talks to fix 2008 prices stretched well past the middle of the year as Australian miners Rio Tinto Limited and BHP Billiton Limited successfully held out for higher prices despite the world"s largest producer, Brazil"s Companhia Vale do Rio Doce agreeing to a smaller raise earlier in the year. But amid a slowing demand and falling steel prices in the last few months, analysts have grown increasingly bearish on the sector, with some forecasting a drop of as much as 40% in prices in 2009.