According to a report released by Australian bank Macquarie, Australia's steel production and iron ore trade in 2009 are forecast to decrease eight percent and five percent respectively, both compared to the 2008 figures.
Accordingly, in 2009 Australia's carbon steel production is expected to fall to 1.232 billion mt, down from an estimated 1.339 billion mt in 2008. Meanwhile, the country's total iron ore seaborne trade in 2009 is expected to drop to 829 million mt from 870 million mt in the previous year.
Macquarie states in its report, "We are expecting further weakness in commodity prices in the next six-nine months and are looking to cost curves for support. The risk is that cost curves may shift down further."
On the other hand, Macquarie has cut its forecast for the 2009 benchmark contract prices for hard coking coal by 21 percent to $110/mt, compared with $300/mt struck last year.
The bank cited a continued deterioration in the steel market as the key reason for a pull back in coking coal prices, adding that the reversal in steel production for 2009 could see seaborne metallurgical coal demand drop 12 percent, or by 27 million mt.