AUSTRALIA'S top commodities forecaster has revealed a more optimistic outlook for the iron ore sector than it offered just three months ago, in the latest sign that confidence in Australia's most valuable export business is recovering.
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.