* Australia raises export forecasts for iron ore,
* Raw material shipments feeding China's steel mills
* Reflects massive expansion by Rio Tinto, BHP and Fortescue
* Gold exports waning on lower price, high costs
By James Regan
SYDNEY, Dec 18 Australia raised its forecasts
for exports of iron ore and metallurgical coal -- its two top
export revenue earners -- reflecting massive expansion work
underway to meet demand for raw materials to make steel in
Despite moves to curb industrial growth rates and close
some ageing steel works, China continues to produce more than 2
million tonnes of crude steel daily, almost 10 times the rate in
the United States.
Australia, the world's biggest producer of iron ore,
forecast a 23.3 percent rise in exports to 650 million tonnes in
the 2013/14 fiscal year, data from Australia's Bureau of
Resources and Energy Economics (BREE) showed on Wednesday.
The forecast was raised from an estimate of 615 million
tonnes just three months ago.
"The super cycle is not over yet," said Keith Goode, an
analyst for Eagle Mining Research in Sydney, referring to
unprecedented commodity demand driven by Chinese demand.
"In China, the main demand still appears to be for iron
Australia's troika of big producers are spending billions of
dollars to dig more, betting on greater economies of scale to
enable them to ride out troughs in the demand cycle
Rio Tinto is preparing to raise output capacity by
about a fifth to 360 million tonnes by 2015. BHP Billiton
is also boosting production.
Fortescue Metals is in the early stages of setting
up its next stage of growth in iron ore production beyond an
annualised rate of 155 million tonnes.
China has plenty of its own iron ore. But much of it is so
low grade its cheaper to import ore with three times higher iron
content from Australia than mine it at home.
Australia's exports of metallurgical coal used in making
steel for the year are forecast to increase by 6 percent to
163.9 million tonnes, according to BREE.
China alone is expected to boost its imports of
metallurgical coal by 8 per cent to 99 million tonnes in
calendar 2014, BREE said.
The Australian data underscores continuing strength in iron
ore shipments and a resurgence in coal, while other major
commodities produced in the country wane.
China buys the lion's share of Australia's iron and coal.
China's overall iron ore imports are expected to climb to a
record 850 million tonnes next year, up from an estimated 800
million tonnes this year, in step with steel output and demand.
Still, according to Australia & New Zealand Bank, markets
for raw materials used in steel making face pressure as higher
freight rates and falling steel prices curb Chinese buying
leading into the Chinese New Year.
China rebar futures -- a barometer of activity --
hit a 2-1/2-month high last week, though the May 2014 contract
has declined more than 2 percent since then.
And while still above 2 million tonnes, China's average
daily crude steel output fell for the third straight 10-day
period this week and declined 3.7 percent in the first 10 days
of December, data from the China Iron and Steel Association
Also, steel mills in China are facing more shutdowns next
year under China's latest economic reform agenda as the
government steps up its fight against air pollution.
A slower Chinese economy is also expected to halve the
growth pace of steel demand to around 3 percent next year.
Nonetheless, after falling below $87 a tonne in September
2012, the steel-making mineral now fetches around $134 .
By contrast, rising costs and declining gold prices are
cutting or wiping out profits of Australian gold producers.
Exports by Australia, the world's second-biggest gold
producer behind China, are forecast to decrease by 4 percent in
2013/14 to 270 tonnes, BREE said.