Article from: http://www.businessweek.com/news/2013-05-22/iron-ore-seen-extending-decline-as-china-steel-mills-shut-down
By: Isaac Arnsdorf
Iron ore will fall another 8 percent in the next several months as steel mills in China, the biggest importer, shut down because of maintenance, power rationing and squeezed profits, according to Deutsche Bank AG.
Prices may fall about $10 a dry metric ton in the next couple of months, analysts led by Xiao Fu and Daniel Brebner said in an e-mailed report today. Ore with 62 percent iron content at the port of Tianjin, a global benchmark, tumbled 22 percent to $123.60 a ton from a 16-month high on Feb. 20, according to The Steel Index Ltd.
Steel prices that have been pressuring Chinese mills are stabilizing as facilities shut down due to power shortages in Hebei province, and more will close for routine maintenance and to draw down surplus steel inventories, Deutsche Bank said. Iron ore rose yesterday for the first time in nine sessions as an Australian cargo topped expectations, according to the report.
“There remains some life in the market yet despite the operating pressures facing Chinese steel mills,” Deutsche Bank said in the report. “We expect that more shutdowns will occur over the near-term, ostensibly for refurbishment. However, we believe that the market needs to be rebalanced and excess steel drawn down from inventory.”
June swaps slid 0.8 percent to $122 a ton as of 10:17 a.m. in London, according to SSY Futures Ltd., a broker.