Deutsche Bank predicts an increase in iron ore prices until the second half of 2017

In 2016, commodity prices made an impressive comeback, especially iron ore prices.

After several years of recession, they jumped nearly 90%, boosted by a combination of increased steel production in China, falling production and a flurry of speculative trading activity in the Chinese futures market.

There is now optimism that Chinese politicians will continue to roll out large-scale infrastructure projects to help economic growth.

Analysts predict Chinese demand for iron ore imports will rise, boosting new supply proposals. "We expect imports of iron ore to continue to grow in the region of 3-4% during 2017, but this is likely to be the first half with lower prices in the second half of 2017."

Thus, Deutsche, like others, including the Australian Treasury, believes that an increase in supply may ultimately negatively affect prices, and new proposals will drag prices down in the second half of this year.