Iron Ore Forecast from BHP

BHP Billiton, the world's largest mining company, expects an oversupply of iron ore for at least another ten years before the market balances.

Speaking to reporters in New York, CEO Andrew McKenzie said prices have bounced off last year's historic lows slightly above $ 60 a tonne, but this cannot be sustained. Iron ore will be one of the longest travel commodities before the market stabilizes.

One of the main reasons for the slow recovery in iron ore prices, Mackenzie said the excess of ingredients for steel smelting, which will persist in the next few years. “The reality is that price is driven by supply and demand, and we have had such a long boom that I think it could take another 10 years for the market to level out,” McKenzie said.

His predictions have been announced despite recent moves by two major competitors in the iron ore market, Vale and Rio Tinto, to cut production targets. At the same time, BHP in April lowered its output for 2016 by 10 million tons per day only after the number two producer, Rio Tinto, cut its forecast for 2017.

The 62% ore was priced at $ 50.87 a tonne this week, well below the $ 70 price seen in April. The raw materials peaked at more than $ 191 in 2011, and the drop led to closures and mergers among more expensive miners.