Iron ore prices resilient… for now

Iron ore prices have outperformed the base metals complex and are now back at year high s . Much of this can be attributed to combination of weather disruptions which impacted Brazilian and Australian exports at the start of the year along with Chinese steel output , which remained relatively strong despite the lockdown. More recently, Brazil’s Para region ( which produces around 35 % of the country’s iron ore ) has been hit by a wave of cov i d-19 which is disrupt ing production and supporting the latest price rise . Despite the strong performance of iron ore prices so far this year, we do not think the current price level is sustainable on a long-term basis . Whilst China’s post covid-19 recovery and continued issues with Brazilian supply will support prices in the near term, a s we expect mine output to normalise faster than the global economy , we see prices dropping longer term.