Is iron ore set to fall to $35?

Despite iron ore’s recent strength, analysts remain negative on the metal, predicting a new floor price of US$35 per tonne.

Iron ore has seen a major rally over the last six months, rising from below US$40 per tonne to reach just over US$70 per tonne in April, before sinking to a more stable level of US$53.20 per tonne as of yesterday.

However, analysts at Morgan Stanley believe a steep decline is still on the cards for the metal after releasing its latest forecasts, although it is still an increase from its original lower price point prediction.

According to Bloomberg, the group has lifted its 2016 forecast to US$46 per tonne, and its 2017 outlook to US$42 per tonne – an increase of 13 per cent from previous estimates – however it has forecast a price of US$35 per tonne for the last three months of the year, expecting additional tonnages coming online from Roy Hill and Vale to drive down value.

 

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