Prices for iron ore have more than doubled in 2020
Iron ore outperformed all commodities in 2020, more than doubling to record highs on strong Chinese steel demand.
As the world’s largest producer of steel at 1.1 billion tonnes in 2020, China imports 60% of its iron ore from Australia. Bilateral relations between the two countries soured earlier this year after Australia supported a growing call for an international inquiry into China’s handling of the coronavirus pandemic. The ongoing tensions haven’t had a big impact on the iron ore trade so far.
Australia’s government said it foresees China’s pull on Australian iron ore exports remaining strong in the next few years.
“Mining exports are expected to fall by 0.5 per cent in 2020-2021 and grow by 5 per cent in 2021-2022,” it said in its mid-year economic report.
Rally
Prices for iron ore have more than doubled in 2020, putting the steelmaking raw material on track to be the top-performing major commodity globally for a second straight year as speculative money floods in and Chinese demand holds firm.
The most active iron ore futures on the Dalian Commodity Exchange have gained 37.8% this quarter and 21.5% in December alone.
Some market analysts, however, expect prices to moderate over the next two years.
S&P Global Ratings said in a report on Vale it expects iron ore prices to average $85 per tonne in 2021, and $70 per tonne in 2022.
Commonwealth Bank of Australia said in a report that iron ore prices could slip below $100 per tonne next year.
