Goldman Sachs Lowers Iron Ore Price Forecast for Q4 2024 to $85 per ton - What Does This Mean for Investors?
In a recent note dated Monday, Goldman Sachs has revised its price forecast for the fourth quarter of 2024, lowering the expected price of iron ore to $85 per ton from $100 per ton. This adjustment comes as a result of growing concerns over an oversupply in the global iron ore market, driven by strong shipments and weakening demand from China.
The 62% Fe iron ore spot price has dropped to a nearly two-year low of $90 per ton, a 20% decline since July 2024. Despite this drop in price, global iron ore supply remains robust, with daily shipments running 2% higher than the same period last year, leading to a surplus in the market.
Goldman Sachs analysts warn that without substantial supply cuts, the market will continue to be imbalanced, putting further downward pressure on prices. They believe that producers lower on the cost curve will need to implement supply cuts to restore balance to the market, with prices potentially needing to fall even further to around $80 per ton.
In the near term, Chinese steel mills may engage in restocking ahead of the "Golden Week" holiday in early October, providing temporary support for iron ore prices. However, this restocking is unlikely to offset the broader surplus in the market.
Overall, the outlook for iron ore prices remains bearish, with the potential for further price declines if supply cuts are not implemented. Investors should closely monitor the market dynamics and consider the implications of the oversupply on their investment portfolios.