Goldman Sachs ups iron-ore price forecast to $ 85/ MT in next 3 months

In its latest research note, the analysts at Goldman Sachs revised higher its price-forecast for iron-ore, citing a jump in the Chinese steel demand to emerge the key driver.

Key Quotes:

Goldman Sachs now looking for iron ore to head to $85 (/metric ton) in the next 3 months.

From their previous forecast (in November) at $55.

There is a new floor at around $60.

Iron ore's price run

Think steel output in China is poised to jump when winter supply curbs are dropped ... which will support  ... looking for greater seasonality in prices.

The premium for high grades is expected to endure.

"The key consequence of mills running at full capacity and making record profits is that high-grade iron ore is preferred to low-grade iron ore, for it creates an environment where maximizing productivity and yields become the top priority".

But risk from rising global output of high-grade material and lower steel production in China.

Iron ore will average $68 a ton this year, $63 in 2019 and $60 in 2020.

"We expect the winter cuts to repeat themselves in 2018 and 2019 given the government's determination to clean up the environment".

"We also expect iron ore prices to increase in the first and third quarters on the policy-driven seasonality".