The iron ore price is expected to reach $150 per
tonne by late 2021, before falling to $93 per tonne by the end of 2022,
according to a report released by Australia’s department
of industry, science, energy & resources.
The figure for 2022
has been revised downward from $109 per tonne, as stated in a previous report
published in June.
“Falling domestic demand for steel in China due to
slower construction activity and the implementation of a number of government
policies has resulted in weaker iron ore prices,” the government said in its
report.
“Key government
policies in China are also having a significant impact on steel demand so far
in the September 2021 quarter,”
A major driver of China’s boom in demand for steel in
the first half of 2021 was the considerable levels of fiscal accommodation
provided by the government in response to the covid-19 pandemic. This included
growth in total infrastructure investment of 30% year-on-year (3-month average)
at the end of March.
However, according to
the report, this stimulative spending now appears to be fading, with total
infrastructure investment contracting in June for the first time in over 12
months.
Prices of iron ore and
other commodities like aluminum rose on Monday.
According to
Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were
changing hands for $117.12 a tonne, up 1.7% from Friday’s closing.
Mining.com