Top iron ore exporter Australia sees prices for the steelmaking raw ingredient falling by more than a fifth over the next two years as demand from China's steel mills slips while domestic and Brazilian output climbs, a government report said on Monday.
In its quarterly Resources and Energy report, Australia's Department of Industry said iron ore prices on a free on board (FOB) Australia basis are expected to slip to an average of $51 per tonne in 2020, a drop of more than 21 percent from Monday's levels of $65 a tonne .IO62-CNO=MB.
The report - which covers a range of resources - said quarterly prices will fall as China's overall iron ore imports slow by 0.6 percent per year to 1.07 billion tonnes in 2020, with steel production easing in the world's biggest consumer of metals. [nL4N1TW04M ]
Near term, iron ore prices are likely to find some support as steel prices themselves head higher. A positive outlook for industrial production and a seasonal rebound in construction activity in China's spring will shore up prices to average $59 a tonne FOB Australia this year, the government report said. (Reporting by Melanie Burton Editing by Kenneth Maxwell)