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J.P. Morgan lowers 2014 iron ore price forecast, still likes Vale

  • J.P. Morgan cuts its 2014 iron ore price forecast by 6% to $118/metric ton, expecting demand from China will grow more slowly to 3.5% from 5% previously, while the likes of Rio Tinto (RIO), BHP and Fortescue (FSUMF) are expected to add ~100M metric tons of supply this year, adding pressure on pricing.
  • Iron ore climbed 4% in Shanghai to $116.8/ton yesterday, trimming the quarterly decline to 13%, meaning JPM basically is expecting iron ore prices to be at the current spot level this year.
  • The firm still likes Brazilian iron ore producer Vale (VALE), saying it will generate positive cash flow even at the lower iron ore price.
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