Back in July, a Singapore-based research house made a near-perfect call on the price rally that few saw coming. Here’s where they see prices going next.
With iron ore prices finally beginning to cool after a shock 20 per cent rally in the third quarter, strategists and analysts are starting to re-evaluate their outlook for the commodity that’s already defied expectations this year.as Chinese steel mills continued to buy the commodity despite a weaker outlook from the nation’s ailing property sector.
“From the current level of $US104.2, we will take risk-measured stop at $US98, slightly below a previous level of support, and take profit at $US120,” Inspirante wrote in the report that was released by Singapore exchange SGX, a major trading floor for iron ore futures.Six weeks after the report was published, iron ore futures hit $US120 per tonne, where they stayed until recently. November contracts are currently trading at around $US115.75 per tonne.
“What we saw when looking at the historical trends was that iron ore can demonstrate short-term strength even when Chinese economic data is bleak,” he added. “Given that the Chinese economy is the second largest in the world, investors and traders will be looking for angles to express a view or participate. Iron ore is therefore a compelling proxy.”
Further, Ms Gower is now predicting iron prices to hit $US120 per tonne by the end of the 2024’s first quarter, a 20 per cent boost to the bank’s previous forecasts.As for Inspirante’s forecasts, with the recent cooling in the iron ore price, Mr Chan and the team have a more tempered outlook.