The Reserve Bank of Australia (RBA), the Australian central bank, has stated in a report relating to its Monetary Policy Meeting held in September 5 that iron ore prices have been supported at higher levels because of sustained strong demand for steel in China, but that prices are expected to fall in the period ahead because of the ongoing expansion of global iron ore supply following an extended period of strong investment.
According to the RBA’s statement, Chinese steel production per capita is likely to be close to its peak and that growth in Chinese steel production would not add much to global demand for iron ore in the future.
Meanwhile, the RBA also stated that in the longer term there is a potential for India to have a noticeable effect on commodity markets as investment in residential construction and transport infrastructure in India has increased.