“Iron ore, the world’s second-biggest commodity cargo after crude oil, is extending a bull marketafter rallying 22 percent from a 22-month low in October as the slowest expansion in exports in 11 years restricts supplies.
Seaborne supply will advance 3.8 percent to 1.09 billion metric tons this year, the smallest gain since 2001, according to Clarkson Plc, the largest shipbroker. Prices in China, the biggest importer, may rise 10 percent to an average of $157.50 a ton in the fourth quarter, the median of 11 analyst estimates compiled by Bloomberg shows. Shares of Vale SA (VALE), which ships more ore than any other company, will rise 19 percent to $30.42 in the next 12 months, the average of 16 estimates shows.
New mines and expansions of existing ones are being postponed by rising costs and licensing delays. Morgan Stanley cut its forecast for export supply by 9.6 percent since October and expects a 99 million-ton deficit in the seaborne market this year, at least the ninth consecutive annual shortage. Vale will report its second-biggest profit ever this year, the mean of 11 analyst estimates compiled by Bloomberg shows.
“The wall of additional iron-ore supply that investors have been fearing is going to be late,” said Neil Gregson, who helps manage about $7.4 billion of commodity assets at JPMorgan Asset Management in London. “Iron ore remains a tight market.”
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