Australia, world biggest iron ore supplier, cuts price forecast

Australia, the world biggest iron ore supplier, said it was cutting its price forecast for next year as supplies were increasing slowing growth in the biggest user China was hurting demand.

Prices will average $US41.30 a tonne in 2016 compared with $US51.20 forecast in September, the Department of Industry and Science said in its latest quarterly outlook. It cut its average price for 2015 by 4.7 per cent to $US50.40 a tonne.

Iron ore, the country’s largest export earner, lost 43 per cent this year as low-cost miners including Rio Tinto, BHP Billiton and Vale pressed ahead with expansions to defend market share, feeding a glut as demand in China faltered, Australian media reported.

The department said exports of Australian iron ore will probably expand a further 13 per cent next year after rising about 7 per cent this year.

It said global trade in iron ore is estimated to have increased by 1.8 per cent in 2015 to 1.4 billion tonnes, the lowest rate of growth since 2001.

“In 2016, world trade in iron ore is forecast to increase by a further 4.5 per cent. Increasing supply, particularly from Brazil and Australia, and an increase in consumption of seaborne iron ore from China are forecast to support this growth,” the department sad in its report.

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