Goldman’s opinion on iron market 03:21 PM EDT, 07/26/2022 (MT Newswires) -- Goldman Sachs on Tuesday said it expects the iron-ore market to be in a surplus in the second half of this year on weak demand as supply remains robust.
"The iron ore market is set to swing into significant surplus over the second half of this year. We now project the market to be in a 67Mt surplus over the remainder of 2022 (vs. 34Mt previously) after a 56Mt deficit in H1," the investment bank noted. "Crucially, this sharp swing into oversupply reflects a combination of both extended property related onshore demand weakness and a sharp deceleration in ex-China steel demand, compounded by a largely unchanged supply path. The market is currently absorbing steel production cuts in China, Europe and Japan as well as mill destocking and the resale of contracted volumes, resulting in a material reduction in spot physical liquidity ... In this context, we see a more severe downturn in iron price over the rest of this year, adjusting our 3/6M targets to $70/85/t from $90/110/t previously. We now forecast the benchmark 62% iron ore contract to average $85/t over H2 this year (vs. $100/t previously)."