In the financial year 2015-16, Australia’s earnings from resources and energy exports are forecast to decline by four percent to $166 billion, with the value of its iron ore exports forecast to decline by 14 percent to $47 billion, year on year, according to a report by the Australian Government Department of Industry and Science.
On the other hand, the Australian government has reduced its iron ore price guidance to $41.3/mt compared to the previous forecast of $51/mt made in October 2015. Declining steel production in China and a further increase in iron ore production by major producers in Australia and Brazil contributed to lower iron ore prices during 2015. The price of iron ore declined substantially during the September quarter and into the December quarter of 2015. As of mid-December, the spot price was below $35/mt, compared to $50/mt in August.
According to the report, in 2016 exports of Australian iron ore are forecast to grow by a further 13 percent to 868 million mt, while the world iron ore trade is forecast to increase by a further 4.5 percent. Increasing supply, particularly from Brazil and Australia, and an increase in consumption of seaborne iron ore by China are forecast to support this growth.