That demand squeeze will continue as China’s now mature steel sector faces further caps on production, which plunged to a 17-month low in August. As a consequence, iron ore will come under more pressure, falling to US$80 to US$90 a ton heading into next year, said UBS Group AG strategist Wayne Gordon.
Iron ore’s rollercoaster ride this year is set to end with a whimper as the contraction in China’s steel industry heralds further declines.
The steelmaking ingredient was in the vanguard of this year’s commodities boom, but has plunged 60% from a record above US$230 a ton in May. Curbs on steel output, alongside a property crackdown and concerns about a power shortage, have hammered iron ore demand in China.
