Australia expects iron ore exports to rise in the next few years

he Australian Department of Industry, Science, Energy and Mines this week adjusted its short- and long-term estimates of exports from the largest iron ore producing countries slightly downwards. It expects Australia, the largest producer, to increase its exports by 5.4% this year to 919 million tonnes. This would be a record value. In the years thereafter, the growth momentum is expected to slow. The 1 billion tonne mark is to be cracked in 2025. The rising exports in the coming years are based on the ramp-up of new mines in the west of the country. Brazil, the second largest producer, is expected to export 4.5% more iron ore this year (375 million tonnes), according to ministry estimates. Next year, it is expected to reach a record 400 million tonnes.

The ministry has also lowered its estimate for iron ore imports by China, the world's largest importer. They are expected to stagnate at about last year's level (around 1.1 billion tonnes) this year and next, before falling slightly in subsequent years. China wants to mine more iron ore domestically in future and use more steel scrap in steel production. The price of iron ore on the SGX in Singapore rose by 32% in the first quarter, continuing the recovery that began in November. It is currently quoted at over USD 150 per tonne. We attribute the price increase to higher steel production in China. In addition, the Chinese government is expected to support the economy. And last but not least, supply concerns have arisen because of the war in Ukraine. According to the ministry, Russia and Ukraine together exported around 72 million tonnes of iron ore last year.

Source: Commerzbank Research, Photo: Fotolia

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