SYDNEY, Dec 18 (Reuters) – Australia raised its forecasts for exports of iron ore and metallurgical coal — its two top export revenue earners — reflecting massive expansion work underway to meet demand for raw materials to make steel in China.
Despite moves to curb industrial growth rates and close some ageing steel works, China continues to produce more than 2 million tonnes of crude steel daily, almost 10 times the rate in the United States.
Australia, the world’s biggest producer of iron ore, forecast a 23.3 percent rise in exports to 650 million tonnes in the 2013/14 fiscal year, data from Australia’s Bureau of Resources and Energy Economics (BREE) showed on Wednesday.
The forecast was raised from an estimate of 615 million tonnes just three months ago.
“The super cycle is not over yet,” said Keith Goode, an analyst for Eagle Mining Research in Sydney, referring to unprecedented commodity demand driven by Chinese demand. “In China, the main demand still appears to be for iron ore.”
Australia’s troika of big producers are spending billions of dollars to dig more, betting on greater economies of scale to enable them to ride out troughs in the demand cycle
Rio Tinto is preparing to raise output capacity by about a fifth to 360 million tonnes by 2015. BHP Billiton is also boosting production.
Fortescue Metals is in the early stages of setting up its next stage of growth in iron ore production beyond an annualised rate of 155 million tonnes.
China has plenty of its own iron ore. But much of it is so low grade its cheaper to import ore with three times higher iron content from Australia than mine it at home.
Australia’s exports of metallurgical coal used in making steel for the year are forecast to increase by 6 percent to 163.9 million tonnes, according to BREE.
China alone is expected to boost its imports of metallurgical coal by 8 per cent to 99 million tonnes in calendar 2014, BREE said.
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