Australian Ministry: Corona affects world trade of iron ore
by David Fleschen
The Australian Department of Industry, Science, Energy and Commodities recently released its quarterly report on the situation and outlook for Australia's key commodities. As always, the report also discusses iron ore, the country's most important export commodity. Compared to the report at the end of March, the ministry now expects world trade in iron ore to fall by around 200 million tonnes (1.58 billion tonnes) in 2020. The downward revision is due to the coronavirus. While the reductions for Australia are moderate, the ministry sees Brazil in particular as being severely affected by the corona crisis. In addition, the dam burst last year is still having an impact there. It has therefore reduced its forecast for the world's second largest iron ore exporter by almost 20%. This means it will also take years before Brazilian exports return to their pre-crisis level.
Australia itself is expected to significantly expand its exports in the coming years and is likely to export more than 900 million tonnes p.a. for the first time in 2021. According to the Ministry, there is also a corresponding demand for the larger quantity of iron ore, namely in China. Steel production there is running at full speed, which is reflected in a high demand for iron ore. China is expected to continue to import more than 1 billion tons of iron ore annually. Because of the tight supply situation, the Australian ministry has raised its forecast for the iron ore price significantly. On average for 2020, it now expects a price that is not too far below the current level. In the coming years, the price is expected to fall as more supply will be available again.
Source: Commerzbank Research, Photo: Fotolia