Iron ore prices have softened in the past few days to about $81.50/tonne but for some forecasters this is still considerably overvalued. SA’s bellwether iron ore producer is Kumba Iron Ore, which has gained 400% to R171 since January, considerably outstripping the 107% appreciation in benchmark iron ore prices. Kumba produces a high-grade iron ore product. In its latest Commodities Comment, investment bank Macquarie said fundamentals did not justify current iron ore prices of $60-$83/tonne. In the current quarter the price was likely to average $65/tonne, its highest level in two years, despite abundant supply of all but some higher-grade units. Macquarie has revised upwards its projections for iron ore demand next year, based on strong Chinese demand and a better outlook for demand outside China. But it said prices above $60/tonne incentivised more production. It said Chinese steel consumption was likely to contract late next year, although it would be strong in the first half. Mac...

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