SYDNEY – Australia has forecast a steep decline in the price of iron ore, its most valuable export commodity, calling an end to an unexpected rally fueled by strong demand from China.
The forecast average price in 2017 of around $52 a tonne – down from about $80 a tonne at present – comes as big miners are set to report bumper profits in coming months, while smaller rivals are still getting back on their feet.
“If the iron ore price starts to go down the high performance of last year won’t be replicated this year,” said Shaw & Partners mining analyst Peter O’Connor. “It could be a trainwreck for the smaller, marginal producers.”
In a closely watched release, Australia’s Department of Industry, Innovation and Science on Monday predicted iron ore to average just $51.60 a tonne this year, easing further to $46.70 in 2018.
The 2017 forecast was still up from its previous estimate of $44.10, reflecting last year’s rally, and broadly in line with major banks on doubts that China’s industrial growth will continue to support 1 billion tonnes of annual iron ore imports.
For the rest of this article, click here: http://www.reuters.com/article/us-australia-resources-forecast-idUSKBN14S0W0