Iron Ore’s Strength Set to Linger Longer on Brazil Supply Woes

Escalating concerns that the coronavirus pandemic may curb iron ore supply in Brazil are set to further support prices — already at an eight-month high — and are pushing back forecasts for the timing of a descent into the $70s. Citigroup Inc., which said in early May that a fall to $70 a ton was due in coming weeks, now expects a drop to that level at the end of this year. Larger-than-expected potential losses from Brazil, together with strong demand from China’s steel mills, will see iron ore hold up for longer before a recovery in global seaborne supply pressures prices lower, according to the bank’s commodities strategist Tracy Liao. “I wouldn’t be surprised to see prices reaching $100,” Liao said, highlighting that China’s port stockpiles are already the lowest since 2016. Chinese stimulus measures, including the issuance of special bonds to help finance infrastructure, will also aid demand, she said. Benchmark spot prices were last at $97.15, near the highest since September. (Bloomberg)