Seeking Alpha

Goldman eyes lower iron ore and copper prices, miners fall

  • Mining stocks are having a rough ride today as the pace of growth slows in China's GDP and industrial production, and Goldman Sachs comes out bearish on copper and iron ore prices.
  • Proclaiming "the sunset of the Iron Age starts in 2014," Goldman believes the steel intensity of the Chinese economy will be on a downward trend from 2014 onwards following a decade where steel production growth outpaced GDP growth.
  • Some indicators already point to lower rates of steel production growth, the firm says; Chinese steel-making capacity is near its peak, and a greater focus on environmental regulations is driving the closure of an increasing number of blast furnaces.
  • Goldman expects Iron ore to fall to $108/ton in 2014 and $80/ton in 2015.
  • CLF -6.1%, RIO -3.2%, VALE -4%, FCX -1.9%, BHP -1.6%.
Comments (10)
  • BlueOkie
    , contributor
    Comments (4474) | Send Message
    Creates a buying opportunity
    21 Jan, 12:48 PM Reply Like
  • unclemike7849
    , contributor
    Comments (165) | Send Message
    Goldman is often right on some calls regarding various issues, but this call is not one of them.
    China having their steel making at capacity will imply a constant or higher level for iron ore, which is currently at about $130 per ton, even if their less efficient furnaces shut down. Goldman's 2015 prediction is utterly irresponsible. I've seen doom and gloom predictions about iron ore for 6 years now but this is the worst, and to come from Goldman puts them in the same category as other analysts that make similar fact-less comments.
    21 Jan, 12:52 PM Reply Like
  • Skaterdude
    , contributor
    Comments (501) | Send Message
    When I'm interested in iron ore (usually when I have some CLF, which I don't right now) I follow this guy on ore prices:


    Pretty useful and ahead of the curve.
    21 Jan, 01:01 PM Reply Like
  • kellyebrant
    , contributor
    Comments (5) | Send Message
    Thank you for the insightful link referral.
    22 Jan, 01:11 PM Reply Like
  • chunghk
    , contributor
    Comments (210) | Send Message
    Goldman is right. CLF - Hopeless and down trend has formed. A "good bye" stock. Low dividend, no chromite project, low iron ore price, less coal usage. Sacks and analysts hold optimism. Small investors usually treat this as a "Strong Sell" or "Good Bye" instead of Strong buy or Buy. "Hold" is ok as the current dividend is approx. 2.60% compared to mini CD bank rate. Thanks.
    21 Jan, 01:06 PM Reply Like
  • dreamin
    , contributor
    Comments (68) | Send Message
    Aren't these the same GS idots that predicted $70 iron ore prices last September? How'd that work out for them?
    21 Jan, 01:21 PM Reply Like
  • slash32is4
    , contributor
    Comments (115) | Send Message
    "the sunset of the Iron Age starts in 2014," ... sounds like the "death of equities" type of statement
    21 Jan, 01:31 PM Reply Like
  • PS1EAI
    , contributor
    Comments (47) | Send Message
    Do the opposite of what GS is telling us. They realize the extreme profit potential in the coming demand for these materials, particularly copper. I'm most certain they are heavily into copper and iron options. This establishment is dedicated to profit, which is OK, but they are not to be considered the friend of the small investor.
    21 Jan, 01:41 PM Reply Like
  • gast77
    , contributor
    Comments (6) | Send Message
    This looks very much like another Goldman making money for them self story.
    the logic however is not on their side: How can Iron ore can become so cheap if the world economy is gaining steam. Even if the Chinese GDP growth is slowing down there is still growth and probably more than in the rest of the world. This means more Iron is needed to build and construct. There has been a consolidation of the industry for many years, iron furnaces might close down in China or not the demand will increase and so will the price
    21 Jan, 07:01 PM Reply Like
  • chunghk
    , contributor
    Comments (210) | Send Message
    CLF - Stock price is leading downwards, probably re-test the low $15. Viva the shorts!
    21 Jan, 07:16 PM Reply Like
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