The demand has not dropped, and additional supply has come on slower than planned, a trend expected to continue into 2014. Longer-term, although most analysts are predicting a sub $100 a ton price point, it is difficult to factor the effects of this price on the high cost Chinese producers who pump 300Mt into the market at cost around US$110-$120 per ton.
For the moment, iron ore producers have their confidence back, with both BHPB and Rio recently announcing renewed expansion plans for their Pilbara operations. It may take longer for the capital markets to regain their interest in resource companies but 2014 is looking to improve on this year…from good to great.
More Commodity Insights Bulletins: