Iron Ore Has More Downside

According to Goldman Sachs, over the next 18 months, the Iron ore prices may tumble about 30%. The main reason for that would the China's devaluation of the yuan.Iron ore was recently to the lowest level since 2008 but rebounded when the steel prices in China advanced.

The supply in the medium term might rise as well.  In the third quarter, the steel production in China typically drops because of the seasonal cycles.

According to Goldman Sachs, at the same time iron ore supply growth will resume operational issues that had held up some output are resolved.

ANZB also recommends bets on iron ore, targeting a retreat to less than $50 a ton.The yuan devaluation and the recent supply disruptions are what Goldman Sachs consider a sideshow for the iron ore market.Ore with 62 percent delivered to Qingdao rose 0.6 percent to $56.74.

Source: Bloomberg