Posted on 06 Jun 2022
ANZ Research, which sees limited upside for iron ore prices, has raised its year-end iron ore target price to $130/tonne.
However, its short-term – zero to three months – target for iron ore price remains unchanged at $145/t, Kallanish notes.
"Supply disruptions from the Russia-Ukraine war are tightening the iron ore market, as Australia and Brazil struggle to maintain current output levels. This comes as Chinese authorities look to implement stimulus measures to support the economy as lockdowns ease. This should support demand in the short term," ANZ says.
However, it expects iron ore prices to trend lower in the fourth quarter and into 2023 as the impact of stimulus measures peters out and iron ore demand ultimately weakens.
"Iron ore prices have found a floor amid renewed supply side issues. This could develop into gains as Chinese stimulus measures boost sentiment. Ultimately, the upside looks limited, as constraints on China’s steel output should keep demand muted," says the research house.
With China announcing stimulus aimed at boosting economic activity, it expects a restocking effort in the second half to stimulate demand and lift iron ore prices.
"However, the upside will be limited. Constraints on steel output remain, while easing regulations on the housing sector won’t solve its underlying issues," it concludes.
Source:Kallanish
