Iron ore extended its gains, approaching $130 per ton CFR, amid expectations of some recovery in steel production and Goldman Sachs’ forecast that the raw materials market will face shortages this year.

Australian iron ore 62% Fe prices rose by $1.5/ton to reach $129.25/ton CFR after rising by 22.5 yuan/ton ($3.1/ton) on the DCE exchange and $1.4/ton on the SGX exchange.

The outlook for raw material consumption improved after Mysteel reported that the share of mills rose this week by 3.9 percentage points and 20.78% monthly, leading to an increase in steel production in the short term.

Moreover, Goldman Sachs predicted in its latest report that “instead of facing a surplus this year, the iron ore market is now set for a clear deficit.”

The bank also raised its average forecast for the price of iron ore from $101 per ton to $117 in 2023, and from $90 per ton to $110 next year.

However, the situation in the iron ore market is not very promising as steelmakers have sharply reduced their purchases as the cost rises.

According to informed sources. “Iron ore demand will not rebound strongly because steel production cannot increase much at the moment. Most plants are still unprofitable, and steel demand is weak. Moreover, iron ore stocks at companies and ports are rising.

Steelhome data showed that port stocks of raw materials in China continued to increase for the second week in a row, by 1.8 million tons since last Friday, to 108.8 million tons.