According to the Quarterly Resources and Energy report released by the Australian Bureau of Resources and Energy Economics (BREE) on March 20, Australia's iron ore exports in 2013 are forecast to increase by 12 percent year on year to 554 million mt, supported by forecasted higher production at a number of mines including those operated by Rio Tinto and BHP Billiton as well as the ramp-up of production at Fortescue's Chichester Hub and Solomon Hub expansion projects.
As a result of robust investment at the start of this decade, expansions and new mines in existing mining regions in Australia are expected to support strong growth in iron ore exports from Australia. Australia's iron ore exports are projected to increase at an average annual rate of eight percent a year over the period from 2014 to 2018 to total 831 million mt in 2018.
In 2013, Brazil's iron ore exports are forecast to increase by two percent, relative to 2012, to total 333 million mt. Brazil's exports are projected to increase at an annual average rate of four percent and to reach 411 million mt in 2018.
Meanwhile, the outlook for the Australian steel commodity market shows that iron ore spot prices for 62 percent iron ore content free on board (FOB) Australia averaged at around US$122/mt in 2012, with higher prices in the first half of 2012 being counterbalanced by a substantial downturn in the fourth quarter. The sharp drop in spot prices, to a low of around US$81/mt FOB Australia, was a result of de-stocking activities by traders in China and negative sentiment surrounding the Chinese steel industry, particularly production overcapacity, said BREE.
According to BREE, iron ore prices are forecast to decline on year-on-year basis and to average around US$90/mt in 2018 (based on current US dollar value).