According to Goldman Sachs Group, there will be an excess supply of iron ore in the second half of the year due to the real estate crisis in China, leading to a sharp drop in prices. Goldman Sachs stated that there would be an oversupply of 67 million tons.
However, it was stated that the decline wouldn’t be sharp as 2014-2015. The institution lowered its 3-month price target from $90 to $70 and its 6-month target from $110 to $85.
Despite these news, iron ore in Singapore rose nearly 4 percent to $109.05 per tonne after the news that the Chinese government will set up a fund to support real estate companies. Bloomberg Intelligence also believes that the real estate boycott in China will hurt commodity markets. The most significant decrease in the third quarter of the year is expected to be in steel, as China’s demand has a share of 49%.
