Australia’s export earnings are ease from A$133 billion in 2021-22 to A$116 billion by 2022-23, reflecting an expectation of a slower fall in iron ore prices through 2023 and then decline to A$85 billion in 2023-24, according to the quarterly outlook report by the Australian government’s department of Industry, Innovation and Science.
Following a volatile 2021, the benchmark iron ore spot price has steadily trended up so far in 2022, with the monthly averages amounting to US$120-140/mt up to late May. The report pointed out that from a forecast average price of around US$115/mt FOB in 2022, the benchmark iron ore price is projected to average US$85/mt in 2023 and around US$70/mt in 2024.
The total volume of iron ore exported from Australia in the March quarter 2022 was around 207 million mt, up 1.1 percent higher year on year and follows a comparatively dry start to 2022. The result also reflects a ramp up of major brownfield and greenfield projects for Rio Tinto, BHP and Fortescue in 2022, with further increases expected for the remainder of the year. Total Australian exports are forecast to reach 894 million mt in 2022, an increase of 2.5 percent year-on-year. Over the outlook period, Australia’s iron ore exports are projected to rise at an average annual rate of 2.8 percent, to reach around 950 million mt by 2024.
According to the report, the global seaborne iron ore market is expected to remain relatively balanced over the outlook period, with growth in exports from both Australia and Brazil over the next few years. However, the persistence of supply chain disruptions and inflationary pressures presents a growing risk to steel demand growth over the outlook, which has repercussions for iron ore demand over the period. Meanwhile, over time, Russia that exported 25 million mt of iron ore in 2021 is expected to seek new markets for displaced export volumes previously sent to Europe. However, this reorganisation may be constrained by logistical issues in shipping to regions such as Asia, as well as ongoing self-sanctioning by other non-European steel producers.
