Australian iron ore production to rise in 2004 fiscal

Australian iron ore production to rise in 2004 fiscal

Looking at the strong demand coming from China, the production of iron ore is forecasted to rise by 7% in Australia during the 2003-2004 fiscal, according to the latest commodity reports by the Australian Bureau of Agriculture and Resource Economics. China is currently the biggest importer of iron ore, increasing its capacity of steelmaking. Imports only by China in 2003 are estimated to have increased by 37 million tons to reach 148 million tons. Industry experts see such strong demand as a major cause to increase the benchmark price in 2004-2005 even higher than the 9% negotiated for fiscal 2004. Naturally, the growing demand from China is encouraging the Australian iron ore producers to increase their capacities. With the capacity expansions being carried out by BHP Billiton, Rio Tinto and mid-sized Portman Ltd., Australian iron ore production is expected to reach 213 million tons in the fiscal year ending June 30, 2004, over the 198.9 million tons recorded in the previous year. The Australian Bureau of Agriculture and Resource Economics forecast the iron exports to rise by 12% to 203 million tons in 2003-2004. However, although the export volume increases, the value of the offshore sales is expected to rise only by 4% to amount to around A$5.5 billion as the stronger Australian Dollar partially offsets the benefit of higher US Dollar prices.