Export outlook for iron ore brightens
In a departure from its gloomy prediction in September that iron ore prices would average just $US101 a tonne next year, the Bureau of Resources and Energy Economics revised that prediction on Wednesday to an average of $US106 a tonne.
While still lower than most exporters would hope, the new prediction would represent an extra $US2.7 billion ($2.56 billion) worth of revenue should it prove correct.
The change to the bureau's forecasts came on the same day the benchmark iron ore price hit its highest mark since July 20. The commodity later began a severe slump.
The benchmark price touched $US124.90 a tonne on Wednesday, and the price has been hovering around these levels - which are widely considered to be its "floor" - for more than seven weeks.
The share prices of major iron ore producers are enjoying the benefits, with BHP Billiton and Rio Tinto shares both testing their highest prices since May, while Fortescue Metals has recovered from its recent debt crisis to be fetching its best share price since mid-August.
However, all those stocks remain significantly lower than the prices they were fetching early last year.
Despite the investment boom having passed from bulk commodities to export gas projects in recent times, the bureau statistics suggest iron ore will continue to be Australia's most valuable export earner in the next two years, at least.
The bureau expects iron ore exports to be worth $54.6 billion to Australia in the year to June 30, 2013, with exports of gas expected to yield $16.4 billion.
But the gap between the two commodities is closing, with the value of gas exports predicted to rise 37 per cent compared with a fall of 13 per cent predicted for iron ore export values.
The statistics also reinforce the notion that Australia's resources industry will increasingly have to rely on higher volumes of exports rather than high prices to maintain its revenues.
Despite higher export volumes of gas, iron ore, coal, gold and most commodities, the bureau expects the value of Australia's resources and energy exports will fall 4 per cent - or about $9 billion - to $184 billion in the year to June 30, 2013.
Frequently Asked Questions about this Article…
The bureau revised its forecast up from an average of US$101 a tonne (published in September) to an average of US$106 a tonne for next year, a more optimistic outlook than three months earlier.
The bureau's revised forecast would represent about an extra US$2.7 billion (roughly AU$2.56 billion) in revenue for Australia if it proves correct.
The benchmark iron ore price touched US$124.90 a tonne on Wednesday — its highest level since July 20 — and had been hovering around those levels (widely seen as a 'floor') for more than seven weeks before beginning a severe slump.
Major producers have benefited: BHP Billiton and Rio Tinto shares were testing their highest prices since May, and Fortescue Metals recovered from a recent debt crisis to reach its best share price since mid‑August. However, all remain significantly lower than their prices from early last year.
Yes. The bureau expects iron ore to continue as Australia’s most valuable export earner for at least the next two years, projecting iron ore exports to be worth A$54.6 billion in the year to June 30, 2013.
Yes. Although iron ore is still expected to be the top earner, the gap is closing: gas exports are predicted to rise about 37%, while the value of iron ore exports is predicted to fall around 13%.
The bureau’s statistics suggest the industry will increasingly rely on higher export volumes rather than high prices to maintain revenues, even though higher volumes of many commodities are expected.
Despite higher export volumes for several commodities, the bureau expects the total value of Australia’s resources and energy exports to fall about 4% — roughly A$9 billion — to A$184 billion in the year to June 30, 2013.
Call 1300 880 160
Start a chat
Schedule a call
