US-based multinational financial services corporation Morgan Stanley has reduced its iron ore price forecast for the current year, expecting a further decline in 2015 as well, since the seaborne supply growth has been faster than expected. The latest forecast by Morgan Stanley is for $105/mt in 2014, compared to an earlier forecast of $118 made in May. Iron ore prices may average at $90/mt in 2015.
Morgan Stanley's iron ore price forecast is below that of Goldman Sachs which predicts an average iron ore price of $109/mt for the current year.
"As seaborne supply enters a period of vast expansion, cheaper tons will displace higher cost tons in China and elsewhere. The entire cost curve will shift lower and levels of cost support will follow. We believe this will simultaneously pressure prices lower," Morgan Stanley analysts indicated.
As SteelOrbis previously reported, early this month Australian miner Rio Tinto CEO Sam Walsh told Bloomberg TV that he does not expect iron ore prices to go down to $80/mt as Goldman Sachs predicts for the next year. "A level of somewhere north of $100 is more realistic," he said.
