Merrill Lynch has revised its forecast for iron ore and coal prices upward, saying unprecedented demand from China will remain high and supply will struggle to keep pace.
In a recent research note reported by Bloomberg, Merrill Lynch analysts said iron ore and coking coal could both rise by 30% globally next year, and could remain at record-highs for the next three years.
“Iron ore has the best fundamentals of any resource commodity over the next three years,'' the analysts said. "China now consumes 45% of global seaborne iron ore, and we believe it will drive 80% of growth in iron ore demand in 2007.''
Merrill Lynch’s outlook meshes with a recent report from RBC Capital Markets says that iron ore prices could rise as much as 35% in the next year due to booming demand from steelmaking regions in Asia.
It also meshes with the comments of Malay Mukherjee, a member of the management board of steelmaker ArcelorMittal, who told Bloomberg recently that “There are a number of new capacities coming on line. It will depend on what the growth will be in the steel industry. The iron ore supply-demand will balance in 2009 and 2010.”
In July, Purchasing.com reported that increased Chinese iron ore demand could trigger a shortage.
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