Commodities | Oct 13 2006
By Rudi Filapek-Vandyck
Rio Tinto’s (RIO) Chief Executive Iron Ore, Sam Walsh, met with analysts in a forum in Melbourne yesterday and analysts at JP Morgan report that while Walsh would not be drawn into specific forecasts “it was easy to conclude that Rio believe another increase in contract iron ore prices is achievable from 1 April 2007”.
JP Morgan has never been a member of the Incredible Bulls Club when it comes to natural resources. The fact sheet that comes with the latest report on Rio Tinto reveals the analysts’ current forecast is for a 4% price increase from April next year onwards.
To colleagues at GSJB Were, honourable members of the Incredible Bulls Club themselves, that must seem a bit too conservative still. Unlike many other colleagues at other brokerages, the GSJB Were analysts did not raise their iron ore price forecasts over the past two weeks. But then they’d already penciled in a 10% price rise and that remains so for the time being.
A closer study of GSJB Were’s latest market update reveals the broker seems to have a different view on the iron ore market leading up to the 2008 contract year. Most other experts have raised their assumptions to a price rollover from 2007 in the year, but GSJB Were believes that will prove to be too positive. The broker maintains prices are likely to come down from 2008 onwards.
At this point in time, however, 2008 is still a long way into the future.