Material Matters: Iron Ore, Lithium, Coal and Critical Minerals

Commodities | Jan 25 2023

A glance through the latest expert views and predictions about commodities: broker outlooks for iron ore, lithium, coal and critical minerals.

-Upside for the iron ore price, before a pullback later
-Persistent deficits for lithium markets
-Thermal coal prices set for a long-term downtrend

By Mark Woodruff

While acknowledging the potential for short-lived pull backs in price, Morgan Stanley forecasts an average US$140/t iron price for the second quarter of 2023, which represents circa 12% upside to the current spot price.

The broker delves back into the history of iron ore spot pricing and points out the current price rally is not only one of the faster bull markets seen, but also, unlike the previous nine bull markets, the rally is being driven by optimism/sentiment, unsupported by tighter supply-demand fundamentals.

Despite this unique situation, the analysts expect a catch up in iron ore supply-demand fundamentals and thus a tightening of the market into the second quarter.

This view assumes property starts remain subdued in China and is based upon a seasonal improvement in China’s steel production by March/April, with increased output by mills to align with the government’s 5% GDP growth target. 

Additionally, there are early signs Brazil’s iron ore shipments to China may be disrupted by seasonal rain, though as shipments take around seven weeks to arrive, the impact on China's steel mills won’t be immediate, explains Morgan Stanley.

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