Australia revised down its 2015 iron ore and metallurgical coal price forecasts as rising production of two of the country’s biggest export earners outstrips demand.
However, robust growth in export volumes meant Australia would still post an 11 percent rise in total export earnings for mineral and energy comodities in 2013-14, the Bureau of Resource and Energy Economics (BREE) said.
The iron ore price is set to average $94.60 a tonne in 2015,
down from its previous forecast of $100.80, BREE said, citing growing competition among producers to sell into China’s steel market.
“Although steel production in China is forecast to increase in 2015, increasing competition among iron ore exporters to sell their additional production is expected to intensify and push prices lower,” Australian forecaster Bureau of Resource and Energy Economics BREE said in its latest quarterly update.
The forecast price for 2015 is just above the current price of $93.30. Exports in fiscal 2014/15 were forecast to rise 13 percent to 720.7 million tonnes, BREE said, just below its previous estimate.
Iron ore, the top business for global miners Vale VALE5.SA Rio Tinto and BHP Billiton , has lost more than 30 percent of its value this year, prompting even low-cost producers such as BHP to look at trimming costs to maintain competitiveness.
BREE lifted its forecast for metallurgical coal exports to 180.5 million tonnes in 2014/15 versus its March forecast of 178.9 million, but forecast a sharp dip in prices to $118.90 a tonne in 2015, well down on its March forecast of $134.60,
Commissioning of new coal mines over the past few years has more than offset lost production from ones that have closed, BREE said.
At prevailing prices many metallurgical coal producers are unprofitable, it added.
(Reporting by James Regan; Editing by Richard Pullin)