Australia Cuts Resources Export Revenue Forecast on Iron Ore Outlook
Australia has revised down the value of its resources and energy export earnings in the year to end-June 2017 by 4.6 percent, or nearly A$10 billion ($7.6 billion), due largely to falling prices for iron ore, its most valuable export.
The downward revision to A$205 billion mainly reflects an earlier than expected decline in iron ore prices since the previous forecasts were published three months ago, the Department of Industry, Science and Innovation said.
Iron ore, Australia's top source of export revenue, should average $62.40 in calendar 2017, down from an earlier forecast of $65.20, the department said.
Iron ore has averaged about $74 a tonne so far this year, implying prices will continue to deteriorate in the second half. The price was last quoted at $63.28 a tonne <.IO62-CNO=MB>
"Global resource and energy commodity demand growth, particularly for steel making commodities, is expected to slow in the next two years, driven largely by a slowdown in infrastructure spending and construction activity in China," the department's chief economist, Mark Cully said.
"Lower demand growth is expected to adversely affect iron ore and metallurgical coal prices," he said.
Australia mined a record 873.5 million tonnes of iron ore in fiscal 2017, making it the world's top producer, department figures show.
The country is home to three of the world's four biggest suppliers - Rio Tinto , BHP and Fortescue Metals Group.
The iron ore price was forecast to decline to $48 a tonne in 2018, the department said.
The cuts were in line with other markets forecasts, with Citi recently slashing its 2017 average price forecast for iron ore to $61 a tonne from $70, and to $50 from $53 for next year.
The department forecast metallurgical coal prices at an average $191.30 a tonne in 2017, falling to $137 next year.
It also revised down its copper price forecast for 2017 to $5,667 a tonne from $5,879 previously, contributing to the revisions in export earnings.
Overall, the department revised down resource and energy export earnings by A$13 billion to A$202 billion for the year to end-June 2018, and by A$8.3 billion to A$200 billion the following year.
(Reporting by James Regan)