Australia expects its iron ore and metallurgical coal export volumes to continue rising in coming years while the record prices for both commodities in 2021 were forecast to ease, the Department of Industry, Science, Energy and Resources said in its Resources and Energy Quarterly released Dec. 20.
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Register NowThe report estimates Australia's exports of iron ore edging up 0.8% year on year to 874 million mt in 2021, before being forecast to rise 5.5% to 923 million mt in 2022 and by a further 2.8% to 948 million mt in 2023.
"The improvement reflects the recovery in production and exports from Western Australia following the dissipation of acute weather disruptions seen at the start of 2021," the ministry said in the report.
"Export volumes have also continued to improve despite ongoing maintenance work at the ports of Dampier and Hedland, as well as pandemic-related delays for major producers in bringing replacement supply online in 2021," it added.
The ministry sees the tight supply situation in the first half of 2021 continuing to ease as the year turns, while estimating that the world's four largest iron ore exporters -- Australia, Brazil, South African and Canada -- hit total shipments of around 356 million mt in the July-September quarter, which is up 6.5% quarter on quarter, and about 13% higher than in January-March.
The ministry estimated global iron ore prices surged 41.8% to average $142/mt in 2021, and forecast a 45.9% retreat to $77/mt in 2022 and another 13.7% decline to $66/mt in 2023.
Metallurgical coal
The surge in metallurgical coal prices came later that for iron ore in 2021, with historical highs reached in September before leveling out in October and November.
"Cuts in crude steel production in China did not lead to any easing in prices, but may have curbed further upward momentum," the ministry said in the report.
"Daily steel production and capacity utilization fell in China in October, and this is expected to continue until the end of the Winter Olympics, creating an additional downward pull on metallurgical coal prices in early 2022," it added.
The ministry forecast global supply to remain tight as strong steel prices encourage global production to rise even while China constraints output, but said gradual gains in Australian supply and the withdrawal of remaining stimulus measures should help markets to balance and lead to a fall in prices in 2022 and 2023.
The department estimated a 74.9% rise in metallurgical coal spot prices to average $227/mt in 2021 before easing by 5.7% to $214/mt in 2022 and slumping 29.1% to $152/mt in 2023.
Contract prices are estimated to rise 51.7% to $197/mt in 2021 and then forecast to rise 16.9% to $230/mt in 2022 before retreating 32.8% to $154/mt in 2023.
For Australia's fiscal year 2021-22 (July-June), the report forecasts the country's metallurgical coal exports to rise 2.2% to 175 million mt, and for FY 2022-23 to rise 3.4% to 181 million mt.