Australia cuts forecast for iron ore price to $ 60 per ton

The Australian government announced a further reduction of its official iron ore price forecast by another 5 percent in 2015. The target price is now $ 60 per tonne, which is mainly due to weakening demand from China amid increased production. Three months earlier, the Australian Department of Industry had announced an iron ore price forecast of about $ 63 per tonne.

In its most recent report released, the Department noted that iron ore prices have shown a steady decline in the past year amid fierce competition among companies looking to sell their goods. The sharp drop in the price of iron ore has led to losses for some producers. The price of the product has plunged almost doubled over the past year.

According to industry analysts, the iron ore price crisis was mainly due to overproduction by mining companies around the world. Giants such as Vale, BHP Billiton and Rio Tinto have boosted production significantly over the past year in anticipation of stronger demand growth from China. The weakening economic growth of the largest consumer has led to an oversupply.

By the way, income from iron ore in Australia has been replaced by other service sectors, including tourism and education. Iron ore demand is likely to decline further as Chinese demand remains muted by slow economic growth. Nonetheless, the Australian government hopes iron ore exports will remain strong in 2015, raising the forecast for FY15 iron ore exports to 762.9 million tonnes from the previous 747.3 million tonnes. Exports in fiscal 2016 are likely to rise to 822.3 million tonnes, according to the government.