While the last decline below $100 in 2012 spurred buyers to rebuild inventories, boosting prices to about $159 in four months, this time around expectations of ample supply will encourage users to keep reserves at a minimum, said Goldman.
“We believe the current downturn could trigger another destocking cycle of similar scale,” Lelong, Daniel Quigley and Amber Cai wrote. “But the eventual rebound will be far less robust than previously.”
Reduced Chinese imports will also offset any impact of expected supply disruptions in India and a possible strike at Australia’s Port Hedland, the world’s largest bulk-export terminal, the bank said. Maritime Union of Australia, which represents tugboat deckhands at the port, approved unlimited work stoppages of 24 hours, 48 hours and 7 days on May 12.
BHP, the third-largest exporter, won’t be able to make up shipments lost during a strike, the company’s iron ore president Jimmy Wilson said in a statement today. The union said May 12 it hadn’t decided whether to take action.
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