The iron ore price has descended in the past 52 weeks. But what's the outlook ahead?
ASX 200 iron ore producers include BHP Group Ltd (ASX: BHP), Rio Tinto Ltd (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG).
So does the iron ore price rise or fall in 2023?
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Will iron ore rise or fall?
The iron ore price has fallen 4.2% in the last year and is currently fetching US$114 a tonne, Trading Economics data shows.
Analysts have mixed views on the outlook for iron ore. Some are maintaining a bullish outlook while others are predicting a bearish trend. In a recent research note, ANZ commodity strategists Daniel Hynes and Soni Kumari predicted the Chinese property market to impact the iron ore price. They said:
The latest measures announced by the Chinese government to support property lending could provide short-term support for the market. However, a sustained improvement in property sales will be required for steel demand to rise next year.
Poor profit margins and output curbs will weigh on steel production through winter, and subsequently iron ore demand. We expect prices to remain in the range of USD100/t.
Meanwhile, Jefferies International analysts are positive on the price of multiple commodities including iron ore, S&P Global reported. Analysts led by Chris LaFemina expect Chinese demand for base metals to stabilise in the first half of 2023 and lift later on in the year, offsetting weaker demand in the United States and Europe. Analysts said:
We believe the (metals and mining sector) in general is poised to materially outperform the broader equity markets once again.
We expect most commodity prices to end 2023 higher than where they are today. Mining shares should outperform once again.
On the flip side, the Office of the Chief Economist in the Industry, Innovation and Science department has cut the price target on iron ore. The report predicts iron ore will fall from US$119 a tonne in FY22 to US$86 a tonne in FY23 and US$79 a tonne in FY24. The report stated the "price outlook in 2023 relies on China's fiscal stimulus and property market".
Share price snapshot
The BHP share price has soared 27% in the past 52 weeks.
The Rio Tinto share price has lifted 19% in the last year.
The Fortescue share price has climbed 8% in the past year.
