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Tekla BIMsight

05 Nov 2012

Australia Boosts Price Forecast for Iron Ore in 2013

Australia, currently the world’s biggest exporter of iron ore, increased its price forecast for the upcoming year, 2013, based solely on expectations that China, the world’s biggestPour buyer and importer of iron ore, will dramatically increase its demand for the raw material in order to satisfy its growing need for steel to complete infrastructure projects.

Iron ore, of course, is used in the manufacture of steel, a fact that makes it critically important anywhere major construction projects are planned or in progress.

According to the Canberra-based Bureau of Resources and Energy Economics, the price of a metric ton will average $108 in 2013, a number that is up substantially from an earlier estimate issued in September, 2012. At the time, it was believed a metric ton of iron ore would average only $101 in 2013.

The Bureau of Resources and Energy Economics also estimated that Australian iron ore exports will top out at about four hundred eighty-one million tons for 2012. The forecast for 2013 whish is, of course, subject to change, is five hundred forty-three million tons, a significant increase over what has been predicted for the current year.

The good news appeared to have impacted prices yesterday because the price for iron ore increased significantly to its highest point in about four months based on information that China’s economy and construction industry will rebound strongly after seven consecutive, slow quarters.

There is reason to believe that is true. China imported an imposing 65.78 million tons of iron ore in the thirty days of November, its second highest month of importing the raw material since way back in January, 2011, nearly two years ago.

Industry analysts are now predicting that Chinese iron ore imports will increase by 5.3% to seven hundred sixty-nine tons in 2013.

If that happens, it will be nothing but good news for the Australian mining industry, for its thousands of Australian workers and, of course, for the Australian economy.

In the Pacific Rim part of the globe and in other parts of the world, as well, a healthy Chinese economy and a strong and active construction industry are needed to sustain the economies of iron-ore producing countries like Australia.

The news that was released yesterday bodes well for Australia and its workers, for the global economy, as well. 

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