Soaring iron-ore prices boosting Aus revenues

He said the higher prices reaffirmed Australia’s position as a reliable and stable supplier and underlined the sector’s role in supporting Australia’s economy throughout the Covid-19 downturn.

“Australia’s resources sector and exports have underpinned our continued economic growth throughout the Covid-19 downturn,” Pitt said.

“It accounts for around 10% of Australia’s gross domestic product (GDP) and directly employs around 262 000 Australian men and women, mostly in regional areas, and supports more than a million other jobs.

“Iron-ore remains our single largest commodity export and it is forecast to earn Australia around A$700-billion from this financial year to 2025/26. Iron-ore supports 45 600 direct Australian jobs. Iron-ore spot prices have surged to as high a $194.5/t, beating the previous high of $187 from February 2011."

The price has risen by 21% since the start of 2021 and more than 130% over the past year. Futures prices on the Singapore and Dalian exchanges are also at historical highs.

“I congratulate the sector for the work it’s done to remain a stable and reliable supplier during the Covid-19 pandemic,” Pitt said on Wednesday.

“Iron-ore is a big part of the resources sector that is forecast to contribute A$296-billion in export earnings this year and in Western Australia, it is carrying the state’s economy through the coronavirus pandemic, providing approximately a quarter of the state government’s revenue.

“Lockdowns would be causing a lot more economic pain without the significant contribution of resources, and in particular iron-ore,” he said.

With most iron-ore contracts priced in US dollars, Pitt said Australian producers were also benefitting from a lower Australian dollar averaging $0.77 so far in April 2021 compared with $1.02 back in February 2011.

He said the high iron-ore prices were being driven by strong Chinese production and demand for steel as well as ongoing supply shortfalls from the world’s second largest exporter Brazil.

Steel production in China hit a near record 94-million tonnes in March, up 19.1% on the past year. Steel prices in China are also showing significant strength.