egolinews.com

JPMorgan has revised its iron ore forecasts, now flagging frontloaded price gains. On the back of these adjustments, the broker has neutralised its view of FMG (NEUTRAL, price target $4.01).

JPMorgan had previously expected the iron ore market to tighten in 2011 and 2012. However, the broker now expects benchmark forecasts to rise by 65%, 10% and 0% in 2010, 2011 and 2012 from 20%, 30% and 10% previously.

The broker said its near-term bullish view reflated improving fundamentals, with reports suggesting Brazil’s Vale has requested a 90% increase to Japanese steel makers for a fixed annual price.

The fundamental drivers include move from annual benchmark towards market based pricing mechanisms, stronger than expected demand in China, an increased contribution to demand from the rest of the world and continued tightness in supply.

JPMogran said the changes to its price assumptions benefited FMG and RIO (OVERWEIGHT, price target $88.11), as well as BHP (NEUTRAL, price target $45.07).

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