According to a report by Australia's industry, science, energy and resources department, the price of iron ore is expected to reach $150 per tonne by the end of 2021 and drop to $93 per tonne by the end of 2022.
As stated in the previous report published in June, the 2022 figure was revised down from $109 per tonne.
"Declining domestic demand for steel due to slowing construction activity in China and the implementation of a number of government policies has caused iron ore prices to weaken," the government report said.
"Key government policies in China have had a significant impact on steel demand so far in September 2021." said.
The main driver of China's boom in steel demand in the first half of 2021 was the significant levels of fiscal adjustment the government has achieved in response to the covid-19 pandemic. This included 30% annual (3-month average) growth in total infrastructure investment at the end of March.
However, these incentive spending now seem to be dwindling, with total infrastructure investments contracting in June for the first time in 12 months, according to the report.
Prices of other commodities such as iron ore and aluminum rose earlier this week.
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