Iron Ore Mine Closures Could Create $70 Bottom, says ANZ

The Australia and New Zealand Banking Group has come out warning that iron ore mine shutdowns in China could help prices fall to $70 a metric ton.

According to Bloomberg:

Slowing steel-demand growth in China, which buys about 67 percent of seaborne ore, and surging low-cost supplies from BHP Billiton Ltd. (BHP) and Rio Tinto Group (RIO) spurred a 44 percent drop in prices this year as a glut expanded. The raw material may drop below $60 next year, forcing less competitive mines worldwide to cut production, according to Citigroup Inc. HSBC Holdings Plc predicts a 30 percent slump in Chinese output in 2015.

According to a report by the ANZ:

Substantial domestic iron ore mine closures would occur between $70 to $75 a ton, creating a floor. Opportunistic Chinese steel mill restocking is not occurring at low prices and highlights how difficult near-term steel conditions must be on the ground.”

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