According to Credit Suisse Group AG, the price of iron ore will average 21% higher this year and may jump to a record should anticipated supply growth be curbed.
Credit Suisse analysts wrote in a report that the spot price of iron ore delivered to China including freight costs will probably average USD 178 per tonne as compared with about USD 147 per tonne average for 2010.
Credit Suisse said that “Supply demand conditions look extremely tight in the first half. Should supply failures occur, however, we could readily see iron ore spot prices spike through previous USD 200 per tonne highs towards USD 250 per tonne in the second quarter of 2011.”
It added that “The second quarter of 2011 will mark the peak in iron ore pricing as new supplies enter the market, particularly from the second half of 2012. However any delays to these expansions will further tighten markets.”