Citi says iron prices to drop to around $50 in short term
PERTH, Australia (Reuters) - Citi on Tuesday forecast iron ore prices would drop to around $50 a tonne in the short term as demand from Chinese steel mills wanes and oversupply grips the international seaborne markets.
"Chances are with the steel margins where they are, there will be a fall in iron ore prices to around $50 a tonne," Citi iron ore and steel trading head Mark Lyons told an industry conference.
But the bank is sticking with its prediction that ore prices will average $58 a tonne in 2015.
Imported iron ore stockpiles at major Chinese ports rose for the second week in a row last week, up 1.3 percent at 100.5 million tonnes as of March 6, according to data provider Steelhome.
Benchmark 62 percent grade iron ore for immediate delivery to China <.IO62-CNI=SI> declined 1.9 percent to $58.20 a tonne on Friday, its lowest since the index was published, according to the Steel Index. It has fallen around 18.3 percent so far this year.
"Steel markets in China are looking in pretty bad shape," Lyons said.
Compounding China's weakening steel market is a forecast fall in exports of steel this year, according to Lyons.
Steel exports in 2015 should drop to around 70 million tonnes from 90 million last year, leaving the domestic market to lap up an additional 20 million tonnes, Lyons said.
(Reporting by James Regan; Editing by Joseph Radford)
