OOOOH nee, niet opnieuw!!!
Goldman sees iron ore falling back to USD 35 this year
Published on Mon, 25 Apr 2016 74 times viewed
Goldman Sachs Group has one piece of advice after this year's dramatic iron ore rally: go short. Analyst Christian Lelong said in an interview “We think this market will go back to USD 35 during the fourth quarte. Our expectation is the oversupply in the iron ore market will return."
In a report on Friday, Goldman analysts including Lelong said that while the rally in Chinese rebar was "leading the charge" in a commodities rebound, the bank didn't see a sustainable shift in raw-material fundamentals until the third quarter. The "tight steel market in China is a temporary distraction" for iron ore, the bank said. "The current rally is unsustainable."
He said "Going into the second half of the year, what are you going to need to absorb all that iron ore supply? It's going to be very hard to have strong enough demand growth in the Chinese steel sector to keep things in balance."
He said "When we look at the profitability of steel mills, we've gone from multi-year lows late last year to a multi-year high in the last couple of weeks. It's a huge swing. The margins are so attractive that you can afford to pay higher and higher prices for your raw materials. That means iron ore is now
He said "Last year, we had the back end of the curve in the mid-to-low USD 30s. Right now, the back end of the curve is in the low USD 40s, and we think at that level, it's a good opportunity for producers to hedge."
Not everyone is bearish. There's room for ore to rise further as China's steel rally will probably endure over the rest of the quarter, according to Credit Suisse Group. Should demand for infrastructure absorb rising steel output, prices may be supported over the year, the bank said on Thursday.
Source : The Age