COLUMN-Worst may be over for iron ore, coal, but supply is key: Russell
--Clyde Russell is a Reuters columnist. The views expressed are his own.--
By Clyde Russell
LAUNCESTON, Australia, Dec 9 (Reuters) - It's an observable fact that steep falls in commodity prices are often a precursor to a rally, and recently some industry executives have said this is likely next year for iron ore and coal.
Notwithstanding the obvious caveat of beware miners talking up prices of commodities they produce, there is some cause for optimism that the worst is over for two of the weakest performers so far this year.
Asian spot iron ore .IO62-CNI=SI is down 48 percent from the start of the year to Monday's close of $69.70 a tonne, while spot thermal coal at Australia's Newcastle Port, an Asian benchmark, has slumped 28 percent to $62.25 a tonne in the week ending Dec. 5.
The case for a stabilisation in prices followed by a modest rally next year is largely built on the view of more high-cost supply leaving the market, coupled with steady demand growth from top importer China.
Peter Poppinga, head of ferrous metals at Brazil's Vale , told an investor briefing in London last week that the iron ore price had overshot to the downside and it will "bounce back in the very near future."
While he didn't specify a level he expects prices to reach, he did nominate $90 a tonne as a hypothetical price based on expected demand and supply. Continuación...