Posted on 05 Oct 2023
The Australian government foresees iron ore prices moderating further as global demand softens. 62% Fe iron ore fines spot prices in 2023 are seen averaging at $100/tonne, according to the industry ministry’s latest Resources and Energy quarterly report seen by Kallanish.
The benchmark iron ore price is projected to steadily fall to an average of about $76/t by 2025.
“There are substantial risks to the global demand outlook. A more pronounced global economic slowdown will exacerbate weak conditions in the steelmaking sector. Slowing growth in the Chinese economy has tilted the balance of risks towards the downside,” the report says.
It projects China, which accounts for almost 60% of global iron ore demand, to see a modest fall in total steel output over the outlook period to 2025.
On the supply side, it expects the world’s two largest producers – Australia and Brazil – to continue to collectively grow export volumes by 3.4% per annum over the outlook period to 2025.
According to the report, spot iron ore prices have been volatile in the September quarter. However, values have generally moderated since the start of the year, driven by slowing global economic growth and China’s property sector weakness.
Meanwhile, global iron ore trade is expected to grow 2.6% annually to 2025, with new supply coming online in Australia, Brazil and Africa.
Australia’s iron ore exports are projected to rise at an average annual rate of 2.3% to reach 946 million tonnes by 2025. Export volumes remain strong, with further greenfield supply from established and emerging producers expected to come online in the next few years.
Australia’s iron ore export earnings forecast in 2023-2024 has been revised up to AUD 120 billion ($75.68 billion) from AUD 110 billion. This reflects a lower-than-expected exchange rate, slightly higher prices and a small increase in volumes.
The earnings are however still down from AUD 132 billion in 2021-2022 due to moderating prices.
As for 2024-2025, iron ore export earnings are estimated at AUD 99 billion.
Australia exported 225mt of iron ore in the June quarter, up 1.2% year-on-year. This lifted exports in the first half of 2023 to 440mt.
Australia’s iron ore export earnings were AUD 32.5 billion in the June quarter, a 5.5% decrease year-on-year.
Source:Kallanish
