Australian government's Department of Industry and Science has forecast that the price of iron ore will average at about $79/mt FOB Australia in 2020, while prices are likely to come under downward pressure after 2020 as supply shifts back towards normal levels. As a result, growing supply is expected to reduce the iron ore price to an average of $65/mt by 2022. However, a significant global recovery is also expected in 2021, which will likely add to steel demand and provide a floor for prices.
Australia’s iron ore exports have recovered following recent weather disruptions and difficulties in the Pilbara region. With Australian iron ore production now returning to the strong levels of late 2019, and with the Australian dollar having depreciated sharply, export earnings are estimated to have reached a new record of A$103 billion in 2019–20. Forecast iron ore export earnings for 2020–21 have been revised up from A$86 billion to A$97 billion. The revisions reflect the impact of the coronavirus outbreak and the resulting weakness in the Australian dollar.
Australia’s iron ore export volumes are forecast to grow from 852 million mt in the 2019-20 period to 912 million mt by 2021-22. This volume growth should largely reduce the impact of price drops, leading to still relatively strong export earnings over the next few years.