Consensus forecasts suggest iron ore delivered into China will average around $55-$60/dry mt this year, following the surprise upside seen in 2016 when prices finished up over 80% and averaged at $58.45/dmt CFR.

Last year prices were bolstered by higher than anticipated Chinese demand and lower than expected supply growth from majors, as well as buoyant sentiment from firm steel and iron ore futures trade at various times in the year.

The cost-push from coking coal also filtered into iron ore, particularly higher grades, as mills looked to maximize direct charge material and reduce sintering/coke usage. Higher input costs translated into firmer steel prices, which perpetuated raw materials strength.

As a result some see iron ore prices rising further in 2017. The Metallurgical Mines Association (MMAC) of China forecast average seaborne prices will move above $60/dmt CFR on marginally better demand and relatively stable production – domestic concentrate supply will fall around 10 million mt, according to MMAC.

Citigroup forecast an average iron ore price of $56/mt CFR in 2017 and $48/mt next year, while Morgan Stanley forecast $58/mt CFR both this year and next. Goldman Sachs sees iron ore prices above $60/mt CFR in the first half of 2017, before falling to $55/mt by the end of the year.

This year Chinese steel output could come under pressure as ongoing trade measures further close the export valve amid a continued contraction in domestic consumption.  While exports moderated last year, this was primarily on square bar as mills in Turkey and elsewh...