Reserve Bank of Australia expects iron ore exports to remain strong

Tuesday, 10 November 2020 15:36:24 (GMT+3)   |   Istanbul
       

The Reserve Bank of Australia (RBA), the Australian central bank, has stated that next year Australian iron ore exports are expected to remain strong amid strong Chinese demand and extended disruptions in Brazil, while the country’s coal exports are expected to be lower due to weak global demand for coal.

Australia’s iron ore export volumes increased and reached a record level in the June quarter, with producers seeking to capitalize on higher iron ore prices. By contrast, coal exports have declined further in recent months amid weak global demand for coal and lower production in response to lower prices. 

The benchmark iron ore prices have remained elevated since the previous August, reaching their highest level since 2014 in early September. The continued strength of Chinese steel production has supported iron ore prices. Prices have also been supported by port congestion in China, although the congestion has eased more recently. The supply of iron ore from Brazil has increased following various disruptions earlier in the year, which has recently dampened the upward pressure on prices.

According to the RBA, coal prices have declined substantially this year. Coking coal prices are not far from their lows for the year. Recent reports that some Chinese utilities and steel mills have been instructed to stop importing Australian coal have led to increased uncertainty about the demand outlook for seaborne coal. Some analysts have suggested that predictions of increased rainfall over Australia have also supported coking coal prices. Increased rainfall will disrupt supply in the coming months, the RBA stated.


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