TEHRAN: Iron ore prices fell below $60 a dry ton for the first time in five weeks as exports from Australia are set to gain speed next year with the expansion of a new mine backed by billionaire Gina Rinehart.
Shipments from the world’s top exporter will rise 10 percent to 824 million metric tons in 2016, following a 4.3 percent increase this year, Australia’s Department of Industry and Science said in a quarterly outlook on Tuesday. The forecast for the average price of iron ore this year was cut to $54 a ton from about $60 forecast in March, the department said. The 2016 forecast was reduced to $52 from $57.
Rising exports may hurt the outlook for prices, which on Tuesday capped the first quarterly rise since the final three months of 2013. The Rinehart-backed Roy Hill mine in the ore-rich Pilbara plans to deliver its inaugural cargoes at about the end of September, adding to increased output from Rio Tinto Group and BHP Billiton Ltd. Goldman Sachs Group Inc. and JPMorgan Chase & Co are among banks predicting that iron ore’s recent rally won’t last.
“Supply is expected to grow in Australia as Roy Hill comes into production and Rio and BHP further debottleneck their operations,” Daniel Hynes, senior commodities strategist at Australia & New Zealand Banking Group Ltd., said by e-mail. “This is likely to continue to weigh on iron ore prices.”
Ore with 62 percent content delivered to Qingdao, which bottomed at $47.08 a dry ton on April 2, tumbled 3.2 percent to $59.35 on Tuesday, according to Metal Bulletin Ltd. That’s the lowest level since May 21. The benchmark jumped 16 percent this quarter after a 28 percent loss between January and March. The department’s price forecasts refer to spot ore free-on-board Australia.
Global trade in ore will climb to 1.42 billion tons in 2016, from 1.37 billion tons this year, according to the report. Brazil’s exports are set to jump to 412 million tons next year from 390 million tons in 2015, it said. Australia and Brazil’s combined share will account for 87 percent of worldwide seaborne trade next year, up from 83 percent in 2015, it said.
