As iron ore prices have fallen to an 18-month low as of early December, reflecting forced cuts to Chinese steel production and weaker demand for steel in the country in the second half of 2021, Australia’s export earnings are forecast to fall to A$118 billion in 2021-22 and A$85 billion by 2022-23, according to the quarterly outlook report by the Australian government’s department of Industry, Innovation and Science. Australia’s total iron ore export value amounted to A$43 billion in the September quarter this year, reflecting the significant fall in iron ore prices from August 2021.
The iron ore export volumes from the country are expected to grow from 867 million mt in 2020-21 to 920 million mt by 2022-23, reflecting the commencement of several new mines in Western Australia.
Following record highs during the first half this year, iron ore prices have fallen to $85/mt by mid-November, reflecting the decline in China’s monthly steel production in the third quarter this year. China’s weaker demand for steel also weighing on iron ore prices. After averaging close to $150/mt in the September quarter, the benchmark iron ore price is forecast to fall to around $85/mt in the December quarter this year. For the full calendar year, prices are expected to average around $140/mt in 2021 and around $80/mt in 2022.
According to the report, the factors that caused the global iron ore supply to be limited in the first half of this year are expected to continue to ease for the remainder of the year. Australia’s export volumes have continued to improve despite ongoing maintenance work at the ports of Dampier and Hedland. Brazilian iron ore supply continues to recover from Brumandinho collapse.