Iron-ore production in Asia to peak by 2025, Fitch Solutions says
Fitch Solutions Country Risk and Industry Research, a unit of Fitch Group, expects iron-ore production across Asia Pacific to rise from 2.16-billion tonnes now to 2.27-billion tonnes in 2025, after which it will enter a structural decline, falling to 2.17-billion tonnes by 2031.
Further, the expected continued slowdown in the growth of the Chinese economy is expected to bring down iron-ore and steel prices as investment into real estate declines owing to excessive leverage and financial risk; however, in the short term, the government seems to be gearing up infrastructure investment as stimulus, Fitch Solutions notes.
It says these short-term measures are muted by the effects of continuing Covid-19 lockdowns.
According to Fitch Solutions, lower medium- to long-term prices are expected to reduce investment into supply as well.
It expects China and Australia to remain the dominant drivers of regional supply and demand outlook.
Australia's wealth of high-quality deposits will continue to give Australian miners and projects a competitive pricing edge, aided by strong policy support for green hydrogen for steelmakers, Fitch Solutions states.
It explains that Australia dominates the region's project pipeline, with most short-run increases in output prior to 2025 elsewhere driven by increases in output at existing operations.
The unit does not expect commodity price increases and supply shortfalls caused by sanctions on Russia to have a considerable impact on iron-ore past the immediate term; however, it notes that higher energy prices and the potential for recession in leading economies may hasten slowdowns in steel demand, posing downside risks for iron-ore production.
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