Australia’s iron ore export earnings are forecast to ease from around A$134 billion in 2021-22, as a result of higher production volumes and stable prices, to A$119 billion by 2022-23, reflecting an expectation of weaker iron ore prices, and then a decline to A$95 billion in 2023-24, according to the quarterly outlook report by the Australian government’s department of Industry, Innovation and Science.
Following a solid recovery in iron ore prices in the first half of this year, the benchmark iron ore spot price again dipped in the July-September quarter, averaging around US$100/mt.
Growing global recessionary fears present further downside risks to iron ore prices. The report pointed out that, from a forecast average price of around US$110/mt FOB in 2022, the benchmark iron ore price is projected to average US$90/mt in 2023 and around US$70/mt in 2024.
The total volume of iron ore exported from Australia in the first half of 2022 was around 430 million mt, up 0.9 percent higher 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 882 million mt in 2022, an increase of 1.3 percent year on year. Over the outlook period, Australia’s iron ore exports are projected to rise at an average annual rate of 3.2 percent, to reach around 959 million mt by 2024.
Meanwhile, Russia is expected to seek new markets for displaced export volumes previously sent to Europe, including markets such as Asia, Africa and the Middle East. However, this reorganisation may be constrained by logistical issues in shipping to these regions, as well as sanctions.