Citigroup says the 2009-2010 iron ore benchmark settlement remains a "big unknown" for 2009 earnings.
The group has forecast a drop of 30 per cent for iron ore fines, pellets and lump to fall 36 per cent.
Citi says talks will again be protracted, with steelmakers calling for a 40 per cent to 50 per cent price fall.
“But such sharp reductions will make captive iron ore production (especially in China) loss-making without subsidies and paradoxically actually increase the share of seaborne-traded iron ore demand,” Citi says.
Citi expects underlying demand to remain weak until the second half of 2010.
Source: Dow Jones
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