Investment bank Goldman Sachs JBWere sees contract iron ore prices rebounding 10 percent next year and spot prices also firming as global seaborne trade picks up and Chinese imports rise.
"After conceding contract price cuts in 2009 ranging from 28 percent to 48 percent we believe the balance of pricing power will shift back in favour of the suppliers in 2010 and we have raised our benchmark price forecast for Australian iron ore fines to (an increase of) 10 percent, it said in a note to clients.
The broker previously expected prices to be unchanged between the 2009/10 and 2010/11 shipping years, which end March 31.
It also raised its forecast for spot prices over the next three to six months to $70-$80 a tonne, delivered in China on the basis that the seller pays for shipping and the buyer for insurance. The forecast is also based on 62 percent iron content.
Spot prices currently stand at around $$76.50 a tonne.
"We see significant upside risk to this view if non-Chinese steel production recovers sooner and stronger than we currently expect," it said.
Sources contacted by Reuters on Thursday said Japan's Nippon Steel and JFE agreed with BHP Billiton to cut fine iron ore prices by 33 percent, matching a benchmark deal reached with Rio Tinto.
But China, the world's largest steel producer, continues to hold out for a price cut of at least 40 percent, straining the benchmark pricing mechanism.
Source: Reuters
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