CANBERRA: Australia’s Dept of Industry on Friday became the latest to forecast lower iron ore prices even as the Northern China benchmark continues to build a solid base above the $50 a tonne mark. The import price of 62% Fe content ore at the port of Tianjin traded at $55.20 per dry metric tonne on Friday according to data supplied by The Steel Index.
The price of iron ore is down sharply since trading within shouting distance of the $70 mark in mid-April but year to date the price is up 28.7% and has surged 49% since hitting near-decade lows in December. Year to date iron ore is averaging $51.70.
After making a rare upward adjustment to predictions in its first quarter report, analysts at Australia’s Department of Industry, Innovation & Science on Friday went the other way in its June report and joined a number of investment banks to forecast a drop in the price. The government forecaster in its latest quarterly report adjusted downward its iron ore price forecast and now expects prices to average $44.20 a tonne this year compared to the $45 per tonne prediction it made in April.
Predictions for next year were slashed by more than 20% and the dept now says prices will continue to decline to average $44.80 a tonne in 2017. In its previous report it saw prices improving year on year to average $56 next year and rising to above $60 in 2018. The prices used by the department are free-on-board Australia. Freight rates have hit rock bottom and the West Australia–China route adds only around $5 a tonne to the price, while from Brazil shipping costs are below $10 a tonne. Australia Industry says its price revision to iron ore is “based on the assessment that loss making operations may continue to produce for longer than previously expected. It also factors in increased supply from India and additional cost reductions reported by iron ore producers.”
