Goldman Sachs recently revised its iron ore price forecast, lowering the expected price for the fourth quarter of 2024 from $100 per ton to $85 per ton. This change reflects growing concerns about an oversupply in the global market. Strong shipments and weakening demand from China are further exacerbating this issue. According to analysts, substantial supply cuts are essential to restore balance in the market.
Despite a 20% decline in prices since July 2024, the supply of iron ore remains robust. Daily shipments are still 2% higher than last year, driving the market into a surplus. Although India has reduced exports, demand recovery seems unlikely without deeper supply cuts. Analysts warn that producers lower on the cost curve must reduce output to correct the market imbalance.
Chinese consumption of iron ore has shown some signs of stabilization, but overall demand remains weak. The weak economic outlook for China, with a downgraded GDP growth forecast of 4.7% for 2024, suggests that domestic demand will not sufficiently support a recovery in prices. While Chinese steel exports rose by 21% in August, the long-term outlook remains uncertain due to potential export declines.
Goldman Sachs believes that prices may need to fall further, possibly to $80 per ton, to force additional supply cuts from marginal producers. In the short term, restocking ahead of China's "Golden Week" holiday in October may provide temporary price support. However, this is unlikely to offset the broader market surplus.
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Goldman Sachs lowers its iron ore price forecast for Q4 2024 to $85 per ton. Analysts emphasize the need for supply cuts.
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