Sunday 20th Jun, 2021

Global iron ore prices hit new high

Global iron ore prices have hit record highs, surpassing the previous record from a decade ago.

The stronger prices have helped push Australian export values to an expected new high of A$136 billion 2020-21, up from the previous record of A$103 billion in 2019-20.

The price has risen by 21 per cent since the start of 2021 and more than 130 per cent over the past year. Futures prices on the Singapore and Dalian exchanges are also at historical highs.

Resources, Water and Northern Australia Minister Keith Pitt said the higher prices reaffirmed Australia’s position as a reliable and stable supplier and underlined the sector’s role in supporting Australia’s economy throughout the COVID-19 downturn.

“Australia’s resources sector and exports have underpinned our continued economic growth throughout the COVID-19 downturn,” Pitt said.

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“It accounts for around 10 per cent of Australia’s GDP and directly employs around 262,000 Australian men and women, mostly in regional areas, and supports more than a million other jobs.

“Iron ore remains our single largest commodity export and it is forecast to earn Australia around  A$700 billion from this financial year to 2025-26. Iron ore supports 45,600 direct Australian jobs. Iron ore spot prices have surged to as high a US$194.5 per tonne, beating the previous high of US$187 from February 2011.”

Pitt said iron ore is a big part of the resources sector and is forecast to contribute $296 billion in export earnings this year.

With most iron ore contracts priced in US dollars, he said Australian producers are also benefitting from a lower Australian dollar averaging US$0.77 so far in April 2021 compared with an US$1.02 back in February 2011.

Pitt said the high iron ore prices are being driven by strong Chinese production and demand for steel as well as ongoing supply shortfalls from world’s second largest exporter Brazil.

Steel production in China hit a near record 94 million tonnes in March, up 19.1 per cent on the past year. Steel prices in China are also showing significant strength.