Australia’s iron ore export earnings are forecast to ease from around A$133 billion in 2021-22 to A$113 billion by 2022-23, compared to the A$119 billion forecast in the previous report, reflecting an expectation of weaker iron ore prices and slightly lower volumes, while export earnings forecast for 2023-24 remain unchanged at A$95 billion in 2023-24, according to the quarterly outlook report by the Australian government’s department of Industry, Innovation and Science.
Despite a solid recovery in iron ore prices in the first half of this year, the benchmark iron ore spot price has continued to fall in recent months, averaging at around US$90/mt in the October-December quarter.
Further outbreaks of Covid-19 in China have continued to weaken domestic demand, adding to pressures from the country’s residential property market. A stabilization of China’s real estate sector, in combination with the country’s substantial infrastructure stimulus and only modest supply growth from Australia and Brazil is expected to provide support for steel and iron ore prices over the outlook period.
The report pointed out that the benchmark iron ore price is projected to average US$85/mt in 2023 and around US$75/mt in 2024.
The total volume of iron ore exported from Australia in the July-September quarter was around 222 million mt, up by 1.2 percent year on year amid a ramp-up of major brownfield and greenfield projects for Rio Tinto, BHP Billiton and Fortescue in 2022. Total Australian exports are forecast to reach 896 million mt in 2022-23, an increase of 2.5 percent and are forecast at 920 million mt in 2023-24, up by 2.7 percent, both year on year.