Australia predicts stabilization of coking coal prices

Iron ore prices will fall in the future due to softening demand and new supply

In its December review, the Australian Department of Industry, Science and Resources forecasts that coking coal prices will average $211/t in the 2024/2025 financial year (ending in June 2025) and $205/t in 2025/2026.

In its quarterly report on resources and energy, the department notes that the price forecast for coking coal is subject to high volatility, given the illiquidity of the market and the possibility of changes in steel trade flows depending on changes in geopolitical and trade policies.

Prices for this raw material, the report notes, recovered to an average level of just over $200/t in October and November this year after September’s lows. They are expected to remain at about the same level throughout the forecast period.

Australia’s coking coal exports are expected to increase from 151 million tons in fiscal year 2023/2024 (ended June 2024) to 174 million tons in 2025/2026.

At the same time, Australian iron ore exports continued to grow in the second half of 2024 due to increased productivity and capacity expansion at new mines.

The Department of Industry, Science and Resources has lowered its forecast for ore prices to $83/t in FY2024/2025 and $77/t – in FY2025/2026. As noted, they will fall in the future due to softening demand and new supply.

Australia and Brazil, the world’s two largest iron ore producers, will continue to increase their exports together, by 1.9% annually over the forecast period (to June 2026). In addition, supplies from Africa are expected to increase. Thus, in 2025, the Simandou mine in Guinea, partially owned by Rio Tinto, is expected to start production.

In its December review, Fitch Ratings raised its iron ore price forecast for 2024 to $110/t and left its expectations for coking coal unchanged. The price of the latter is expected to reach $190/t in 2025 and $170/t in 2026.