Australia, the world’s largest iron ore exporter, raised its price estimate for the steelmaking raw material next year as surging Chinese steel consumption absorbs increased supplies.
Prices will average $119 a metric ton in 2014 from $112 forecast in June, the Bureau of Resources and Energy Economics said in a report today. The commodity will average $121 this year compared with $117 estimated in June, it said. Australia may ship 570 million tons this year, up 16 percent from 2012, and 669 million tons in 2014, the Canberra-based bureau said.
Iron ore entered a bull market in July as users in China replenished stockpiles that shrank in March to the lowest level since 2009. Morgan Stanley said last month that the commodity will be supported into the first half of 2014 before a global surplus emerges, while Citigroup Inc. and BHP Billiton Ltd. (BHP) have bearish short-term views as mining companies boost output.
“China’s steel consumption is forecast to increase by 5 percent to total 703 million tons” this year, the bureau said. “This growth is expected to be supported by continued growth in commercial and residential construction.”
China will import 831 million tons of iron ore this year and 872 million tons in 2014, compared estimates in June for 774 million tons and 805 million tons, the bureau said. Australia’s exports are projected to rise at an average annual rate of 8 percent a year from 2014 and 2018, the bureau said.
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