Australia, the world’s biggest iron-ore exporter, raised its price estimate for next year on expectation that infrastructure projects and stimulus spending by China, the world’s biggest buyer, will boost demand.
Prices will average $106 a metric ton in 2013, compared with a September estimate of $101 a ton, the Bureau of Resources and Energy Economics said in a report today. Prices are set to average $128 a ton in 2012 from $126 a ton forecast in September, the Canberra-based bureau said. Australia may ship 481 million tons in 2012 and 543 million tons in 2013, from 483 million tons and 528 million tons predicted in September, it said.
Iron ore climbed yesterday to the highest price in more than four months on signs China will rebound after a seven-quarter slowdown. Industrial output and retail sales rose faster than economists estimated, data showed Dec. 9, bolstering prospects for a sustained pickup. China imported 65.78 million tons of the ore last month, the customs bureau said Dec. 10, the second-highest level after a record 68.97 million tons in January 2011, data compiled by Bloomberg show.
“The mood is improving,” said Tom Price, a commodities analyst at UBS AG in Sydney. “After Chinese New Year through to the middle of the year, there’s a lift in raw materials trade, steel production rates lifts and the whole industrial sector comes back to life.”
China’s iron-ore imports will climb 5.3 percent to 769 million tons next year, today’s report said. The country’s crude-steel production will gain to 732 million tons next year from 704 million tons in 2012, it said.
Iron-ore exports from Australia advanced 7.6 percent to a record 44.2 million tons in October, according to government data compiled by Bloomberg. China’s industrial production climbed 10.1 percent in November from a year earlier and retail sales growth accelerated to 14.9 percent, according to the country’s statistics bureau.
Prices in the first half of 2013 are expected to remain around current levels, before increasing in the fourth quarter of 2013 in line with an expected increase in steel consumption demand, the report said. China approved plans including building of roads, subways and extra spending on railways in September.
The country’s crude-steel production, the biggest in the world, gained 14 percent in November from a year earlier, the National Bureau of Statistics said Dec. 11. Output climbed to 57.47 million tons last month, it said.
Gross domestic product will increase 7.7 percent in the October-December period following a third-quarter gain of 7.4 percent, according to the median estimate in a Bloomberg survey.
The bureau’s forecast referred to iron ore with 62 percent content free-on-board Australia. The same grade of ore delivered to the Chinese port of Tianjin rose 1.2 percent to $124.90 a dry ton yesterday, the highest since July 20, according to a gauge compiled by The Steel Index Ltd.
Iron ore is measured in dry tons, or metric tons less moisture. At Tianjin port moisture can account for 8 percent to 10 percent of the ore’s weight.