Iron ore slips further
The price of iron ore has continued its slide below budget estimates, even after the upgrade of a separate forecast.
The price of iron ore has continued to fall further below federal budget estimates, even after the upgrade of a separate government forecast on the back of the commodity’s surprising strength.
Iron ore slipped 0.2 per cent to $US54.40 a tonne in the most recent session, according to The Steel Index, from $US54.50 the previous day.
Although trade has been subdued during a weeklong public holiday in China, the commodity has been lower or steady in each of the past six sessions.
Several analysts have upgraded forecasts after the key export defied expectations to climb above $US60 by mid-August.
The Department of Industry, Innovation and Science, which offers a separate estimate for iron ore to the Budget papers, raised its prediction by around 10 per cent to $US47 a tonne for 2016-17.
The department also upgraded forecasts on metallurgical coal prices, and the two upgrades are tipped to lift export earnings by $12.7 billion compared to the department’s earlier projections.
The department expects prices for both commodities to decline from current levels, a widely held view.
Many analysts expect iron ore to fall to the low $US50s or $US40s. JP Morgan analysts are among the most bullish, last week reaffirming a 2017 prediction of $US54. By contrast, Goldman Sachs expects a price of $US36 in the same time period.
In London trade, BHP Billiton shares rose 2.5 per cent, while Rio Tinto added 2.2 per cent.