FXStreet notes that, while China’s announcement that it will crackdown on speculation and market irregularities has taken some of the froth out of the iron ore market in recent weeks,  strategists at Capital Economics think the price of iron ore will ultimately be driven even lower by less favourable fundamentals over the rest of the year.

“While the government’s actions look to have taken a bit of the froth out of the iron ore market in the near term, history suggests that they won’t have much of an influence in the longer term.”

“We doubt that this current crackdown on speculation will have much of an effect on the price of iron ore over the months ahead. However, we think that market fundamentals point to the iron ore price falling further before the end of 2021.”

“We expect the price of iron ore to drop back to around $140 per tonne by end-2021, and $120 per tonne by end-2022 as the market shifts into a surplus.”