Iron Ore a Fade and a Seasonal Uplift in Aud? - ING
Analysts at ING Bank explained that iron ore dynamics point to seasonal AUD uplift, fade this effect.
Key Quotes:
"Qingdao
iron ore prices have surged since bottoming around the US$40/tonne in
mid-Jan, although our commodities analysts have been questioning the
durability of the rally. Specifically, they note that gains have been
largely attributable to increased purchases by Chinese and global steel
mills (with overall capacity utilisation increasing from 64.6% in Dec
2015 to 66.2% in Feb 2016)."
"This demand is likely to be
unsustainable in the absence of further stimulus spending by Chinese
officials. On the supply side, recent production changes (ie, lower
output estimates) are likely to be of a temporary nature, with the
general trend reverting to increases in iron ore production as we head
into 2017. Our house view is that iron ore prices will fall back to
US$50/tonne in 2Q16 as seasonal effects fade."
