Australia expects iron ore prices to fall to $100 by the end of 2022

Coking coal prices are expected to rise to $150 per ton due to lack of production investments

Commonwealth Bank of Australia (CBA) has reviewed its long-term forecasts for iron ore and coking coal considering a pandemic, declining commodity demand in China and the war in Ukraine. CBA expects iron ore prices to fall to $120 a ton by the end of September and to $100 by the end of the year, SteelOrbis reported.

Now the price of iron ore is almost $130 per ton.

“This fall reflects China’s plans to cut steel production this year, maintaining its output level below 2021 levels. For 2023, the bank anticipates a further 20 percent decrease to US $80/mt for iron ore prices and prices are expected to stay at that level into 2025,” the bank said in a statement.

The bank has also reviewed its forecast for coking coal prices, with coking coal prices expected to rise from $143 per ton to $150 due to a lack of investment in coking coal production. As a result of rising coking coal prices, decarbonisation efforts may accelerate.

In the second half of 2021, Moody’s expected a gradual decline after 2022 in world iron ore prices to an average of $70-80 per ton, which was recorded in 2016-2019.

The Australian Ministry of Innovation, Industry, Science and Research forecasts a reduction in nominal world iron ore prices to $93/t by the end of 2022. The biggest consumer of iron ore, China, can reduce demand for it and other steel raw materials as it implements its “green” transition.

Earlier GMK Center reported that in the first quarter, China reduced steel production by 10.5% compared to the same period in 2021, to 243.4 million tons.