(Ecofin Agency) – Iron ore prices have reached historically low levels in recent weeks. While Goldman Sachs is forecasting a price of $85 per tonne by the end of the year, announcements from the world’s largest consumer of the ore are sparking a recovery in the markets.
The benchmark iron ore contract on China’s Dalian Commodity Exchange hit a three-week high on Wednesday, trading at $103.82 per metric ton. The rebound, driven by a positive outlook for the Chinese economy, comes after several recent all-time lows.
According to details relayed by Reutersthe price of iron ore is indeed benefiting from the announcement by the Chinese government of stimulus measures, including a reduction in interest rates by the central bank. Mortgage lending conditions are also being relaxed, which can revive the real estate market, the main consumer of iron ore. It should also be remembered that China is the world’s largest consumer of iron ore.
It is still too early to say what impact these measures will have on the longer-term outlook for the iron ore market, as the commodity has been one of the worst performers since the start of the year.
The price of iron ore has indeed fallen by more than a third since January, falling to less than $90 in early September, a first since 2022. However, the current rise could confound the forecasts of several analysts, who have estimated that the price of the ore could trade between $80 (Commonwealth Bank) and $85 (Goldman Sachs) by the end of the year.
In any case, these fluctuations will be watched with great interest by Mauritania and South Africa, the continent’s two main iron ore producers. In Mauritania in particular, iron ore is, along with gold, one of the two main mining products exploited. Guinea will also keep an eye on the price outlook, as the country prepares to launch exploitation of the Simandou deposit in late 2025, capable of adding 100 million tonnes per year to global production.
Emiliano Tossou
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