The current iron ore market “looks like a game of chicken where no player has blinked,” says the Hong Kong and Shanghai Banking Corporation.
HSBC, one of the largest banking and financial institutions in the world, is cutting its 2015 forecast for iron ore prices to US$85 per tonne from US$105 per tonne and its long-run price from US$92 per tonne to US$80 per tonne.
The bank says its revisions are partly driven by recent comments from Rio Tinto (NYSE: RIO; LSE: RIO), BHP Billiton (NYSE: BHP) and Vale (NYSE: VALE) that suggest the major producers “are likely to continue to compete heavily on production growth and costs, with little regard for market outcomes.
“The reaction to low prices seems to be lowering unit costs through continued expansion,” the bank continues. “This is pushing out high-cost Chinese supply and we think this will continue to dominate pricing in 2015.”
Read the complete article at NorthernMiner.com/news/hsbc-cuts-forecasts