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What’s Next for Iron Ore From the Guy Who Foresaw 2016 Rally

  • Commodity seen higher in 2017, 2018, Prestige’s Schenker says
  • Weaker dollar set to boost prices as macro factors ‘critical’

Iron ore will probably extend 2016’s rally as China takes further steps to stoke growth and the dollar weakens, according to Prestige Economics LLC’s Jason Schenker, whose rare bullish call in the final quarter of last year is turning out to be right.

While the ride may be choppy, the commodity will trade at about $60 a ton this half and average $55 in 2016, said Schenker, president of Austin, Texas-based Prestige. That compares with $53 so far. Further gains are in store, with $62 seen in 2017 and $72 the year after, he said in a phone interview.

Iron ore has soared in 2016, snapping three years of declines, as stimulus and a credit-fueled property boom in China lifted demand. The upsurge confounded expectations for further losses as supply gained, and prompted banks from Goldman Sachs Group Inc. to Morgan Stanley to revise their forecasts higher. Last October, as iron ore racked up a double-digit loss, Schenker had predicted a rebound, saying that China’s government would bolster the economy and steel exports from the world’s largest producer would hold up.

‘Absolutely Critical’

“What I...