Australian Government forecasts iron ore prices to average $87/t in 2024

Australia's Department of Industry, Science and Resources predicts that the spot price for 62% Fe grade iron ore will average US$87/tonne (FOB, Australia basis) in 2024, slumping from this year's average of $105/t, according to its latest resources and energy quarterly report. Forecast softened demand for iron ore in China and expanded global supply will be the main causes of the price dip, it noted.

Modest falls may be seen in Chinese steel production next year, the report stated, citing weakening domestic steel demand over the period against a background of oversupply and financial woes in the country's property market.

On the other hand, global iron ore supply will grow with the ramp-up of greenfield projects by major miners in Australia, and the planned expansion in production by Brazilian mining companies Vale and Companhia Siderurgica Nacional, according to the report. Adding to the growth of global iron ore supply too will be volumes from emerging producers in Africa.

During the present October-December quarter, spot prices of iron ore have performed strongly, the resources department notes, mainly due to bullish sentiment encouraged by new economic stimulus measures unveiled by the Chinese government.

Mysteel data supports this view, with Mysteel SEADEX 62% Australian Fines averaging $127.5/dmt CFR Qingdao so far this quarter, up by 12% from the average over July-September. Moreover, on December 26 the price reached $141.45/dmt CFR Qingdao, the highest since June 2022, as reported.

Notably, such surges in iron ore prices during the quarter were contrary to the seasonal trends witnessed in the same periods in the past two years, when prices slumped due to steel production cuts demanded of Chinese steelmakers by the Chinese government, the report added.

In fact, in 2023 "the Chinese government prioritized economic growth over other considerations," the report said.

Note: This article has been written in accordance with an article exchange agreement between Mysteel Global and SteelMint.