In its recent report, Bank of America Corp said it expects the global price of iron ore to decline to $110 a tonne by the end of 2013 from $140 a tonne in the first quarter because of supply glut in the market.
Bank of America feels that the recent price rally is not sustainable and the price should come off in the second half of the year as more supply begins to come on line. Prices will “remain supported over the winter owing to seasonal factors, it said.
According to a January 10 report from Credit Suisse Group AG, ChinaÂ’s coldest winter in 28 years curbed its domestic production of iron ore.
Data from The Steel Index shows that the price of ore with 62 per cent iron content delivered to the Chinese port of Tianjin rose 0.6 per cent to $145.90 a dry tonne.
Even brokerages like Deutsche Bank AG, JP Morgan Chase & Co expect prices to retreat in the second half as supply increases.
Deutsche Bank said on January 8 that prices will drop below $120 in the second half from about $170 in the first six months, predicting that the theme of 2013 may be “a tale of two halves.
Since plunging to a three-year low in September 2012, ore price recovered 68 per cent as China, the worldÂ’s biggest buyer, accelerated for the first time in two years and mills rebuilt inventories.
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