Iron Ore Sales from Australia to Gain 21% on Price, Bureau Says

MELBOURNE, Mar. 2 -- Australia, the world's largest iron ore exporter, is forecast to boost sales 21 percent next fiscal year as prices gain.

Exports may be A$35 billion ($31 billion) in the 12 months ending June 30, 2011, from A$29 billion this year, the Canberra- based Australian Bureau of Agricultural and Resource Economics said today in a report. Total sales from metals and minerals may gain 18 percent to A$88 billion.

BHP Billiton Ltd., Rio Tinto Group and Fortescue Metals Group Ltd., the three biggest producers, are expanding iron ore mines in Australia to meet revived demand led by China. Prices for iron ore and coking coal, used in steelmaking, will increase "significantly" in the next contract year, the bureau said.

"Steel consumption is projected to grow rapidly, being underpinned by continued industrialization in developing economies" and an economic recovery in developed countries, the bureau said in a report. Global steel consumption may grow at six percent a year through to 2015, it said.

Exports of iron ore are projected to increase at an average annual rate of 7 per cent to 2015, the bureau said. By 2015, Australian exports are projected to account for 42 per cent of world trade, it said.

Australia may ship 422 million metric tons of iron ore in calendar 2011, up 6.3 percent from this year, it said.

The iron ore contract price may increase 50 percent to $86 a metric ton in the year from April 1, Credit Suisse Group AG said last month, citing rising global steel output.

World's Biggest

China, the world's biggest producer of steel, is forecast to produce 659 million tons next calendar year, it said. The nation's steel consumption is projected to increase by 9 per cent a year to 812 million tons by 2015.

Sales of coking coal from Australia, the biggest exporter, are forecast to rise 5.3 percent in calendar 2011 to 158 million tons, while sales may gain 30 percent to A$30 billion in fiscal 2011, the bureau said.

Australia accounted for 64 percent of coking coal exports last year and will stay the biggest exporter for the bureau's forecast period through to 2015, it said.

Prices are unlikely to fall below A$100 a ton for any sustained period because of higher capital costs and increasing demand, it said. Contract prices are $129 a ton for the year ending March 31.

BHP, partner in the biggest producer of coking coal, is probably asking Japanese steelmakers to pay $240 a metric ton for the fuel for the year starting April 1, UBS AG said Feb. 18.