reply Iron ore won't enter 'supercycle'

Although global iron ore prices have consolidated at high levels, industry insiders say the so-called "super cycle" of sustained increases will not occur and prices may fall in the future.Eduardo Bartolomeo, chief executive of Brazil's Vale, said iron ore would not enter a new supercycle, the Financial Times reported Tuesday. He expects the current supply crunch to ease in two years and demand for the steelmaking ingredient to level off.Mr Bartolomeo said the record surge in iron ore prices over the past year was a far cry from the boom of the early 2000s, which was driven by China's rapid industrialisation.He believes that under the background of global economic recovery, iron ore prices will continue to stay high until 2023. "Despite continued cuts in iron ore production, a return to track in Europe and another huge stimulus package announced in the US, these factors will keep supply tight for at least two years," he said.However, he stressed that "we don't have a huge demand shock right now compared to the last big rally". He also believes demand for iron ore will slow in the medium term, from 2025 to 2030.'There is a real short-term mismatch between supply and demand for many commodities, caused in part by the outbreak,' the Journal article said. For example, iron ore production in Brazil, the world's second-largest producer, has been affected by supply disruptions caused by the outbreak and heavy rainfall. However, China's demand remains strong as it has recovered from the epidemic. This supply and demand imbalance may persist for a while, but the prospect of tighter fundamentals in the long run may not be there.