Australia’s biggest miners face the prospect of iron ore staying flat for longer, after prices for the country’s most lucrative export crashed more than a quarter this year amid uncertainty about China’s economic outlook.
The value of iron ore, Australia’s largest export and a billion-dollar earner for the federal government, has plunged 27 per cent from 18-month highs.Westpac Bank’s commodity team, in a note on the sector, said China’s steel mill stockpiles have jumped to their highest level since February last year, above seasonal averages, and iron ore port inventory has risen in 11 of past 12 weeks, up 30 per cent from September.
China mills more than half the world’s crude steel and is exporting record amounts as it grapples with a sustained building and housing development crisis that earlier this month prompted the country’s Housing and Urban-Rural Development Minister, Ni Hong, to reiterate that “housing is for living in, not for speculation”.
BHP’s vice president of market analysis and economics, Huw McKay, said in a commodity outlook late last month that China recorded its fifth consecutive year of crude steel production above 1 billion tonnes on the back of solid demand in non-housing sectors and a material jump in net exports to a seven-year high.