Goldman sees iron back below US$50 as supplies expand

Singapore

IRON ore is headed back below US$50 a tonne as supplies from Australia and Brazil expand and a slump in steel prices squeezes mills' profits, according to Goldman Sachs Group Inc, repeating a forecast that recent gains won't last.

Freight data from terminals in the two biggest shippers showed volumes rose 10 per cent in the first half of June compared with the average over the first five months, the bank said in a report dated June 21. The rise will be sustained, allowing inventories in China to recover and sending prices lower again, Goldman said, predicting ore will average US$49 a tonne in the third quarter and US$48 in the final three months.