Australia has lowered its iron ore price forecast to $54.4/mt from the previous forecast of $60.4/mt for 2015 and to $52.1/mt from $56.8/mt for 2016, according to a report by the Australian Government Department of Industry and Science. The downward revision in the price forecast is due to the expectation that China’s steel production will contract in 2015 and 2016 as the seaborne supply of iron ore increases.
The report indicated that the global trade in iron ore is forecast to increase by one percent year on year in 2015 to 1.37 billion mt. In 2016 world trade in iron ore is forecast to increase by 3.6 percent to 1.4 billion mt as Australia and Brazil increase supply by 10 percent and six percent, respectively.
On the other hand, Australia’s resources and energy commodity export earnings are estimated to have declined by 11 percent in 2014-15 to $174 billion mainly due to a decline in iron ore and metallurgical coal export earnings, which are estimated to have fallen by 27 percent and seven percent respectively in 2014-15.