There are two commodities that get a lot of attention from Australian investors – iron ore and lithium.
Hundreds of billions of dollars are invested in companies with exposure to these metals. As a result, their prices can have a big impact on the wealth of the nation.
But where are iron ore and lithium prices heading from here? Let's take a look and see what analysts at Goldman Sachs are forecasting for the coming years.
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Iron ore price forecast
If you own BHP Group Ltd (ASX: BHP), Fortescue Ltd (ASX: FMG), or Rio Tinto Ltd (ASX: RIO) shares, you will no doubt be interested in knowing what analysts are predicting for the iron ore price.
Firstly, according to CommSec, iron ore futures fell by 31 US cents or 0.3% overnight to US$104.02 a tonne amid investor caution over the scale of China's demand recovery.
Looking ahead, Goldman Sachs believes the benchmark iron ore price will average US$111 a tonne in 2024.
After which, the broker is forecasting weaker prices the following year. It expects an average benchmark iron ore price of US$95 a tonne in 2025.
This trend is expected to continue in 2026, with Goldman pencilling in an average benchmark iron ore price of US$93 a tonne for the year.
Finally, in 2027, the broker believes the steel-making ingredient will soften slightly again. It is forecasting an average benchmark iron ore price of US$92 a tonne for the year.
In summary, Goldman expects the following for iron ore:
- 2024: US$111 a tonne
- 2025: US$95 a tonne
- 2026: US$93 a tonne
- 2027: US$92 a tonne
Lithium price forecast
It certainly has been a tough 12 months for owners of lithium stocks such as Core Lithium Ltd (ASX: CXO), Liontown Resources Ltd (ASX: LTR), and Pilbara Minerals Ltd (ASX: PLS). They have underperformed due to significant weakness in the lithium price.
But will this weakness soon ease or are things going to stay the same way? Let's now take a look at what Goldman Sachs expects.
As a reminder, the current spot price of lithium carbonate in China is US$13,547 a tonne. This is down from the 2022 average of US$63,232 and the 2023 average of US$32,694 a tonne.
Goldman expects the following for lithium carbonate:
- 2024: US$11,106 a tonne
- 2025: US$11,000 a tonne
- 2026: US$13,323 a tonne
- 2027: US$15,646 a tonne
There are of course multiple types of lithium, so now let's take a look at the price of spodumene.
The current spot price of lithium spodumene is US$1,210 a tonne. This is down from the 2022 average of US$4,368 and the 2023 average of US$3,712 a tonne.
Goldman expects the following for lithium spodumene:
- 2024: US$928 a tonne
- 2025: US$800 a tonne
- 2026: US$978 a tonne
- 2027: US$1,155 a tonne
As you can see above, it seems that Australian lithium miners are going to have to get used to lithium prices trading around current levels for the foreseeable future.
