(Corrects percentage fall in headline, paragraphs 1 and 2; changes Monday price for iron ore in paragraph 2)
* Quarterly resources report sees prices at avg $51/tonne in 2020
* Australia, Brazilian output to rise, China demand to moderate
* Copper prices to avg $7,910 by 2020 from $6,462 this year
By Melanie Burton
MELBOURNE, July 2 (Reuters) - Top iron ore exporter Australia sees prices for the steelmaking raw ingredient falling by more than 10 percent in the next two years as demand from China’s steel mills slips while domestic and Brazilian output climbs, a government report said on Monday.
In its quarterly Resources and Energy report, Australia’s Department of Industry said iron ore prices on a free on board (FOB) Australia basis are expected to slip to an average of $51 per tonne in 2020, a drop of 12 percent from May’s levels of $65 a tonne, according to the department’s figures.
The report - which covers a range of resources - said quarterly prices will fall as China’s overall iron ore imports slow by 0.6 percent per year to 1.07 billion tonnes in 2020, with steel production easing in the world’s biggest consumer of metals. [nL4N1TW04M ]
Near term, iron ore prices are likely to find some support as steel prices themselves head higher. A positive outlook for industrial production and a seasonal rebound in construction activity in China’s spring will shore up prices to average $59 a tonne FOB Australia this year, the government report said.
On the demand side, growth in global industrial production and manufacturing appears to have peaked in the first half of this year, the report said, suggesting resources prices may generally have set their highs for the cycle.
However, prices across the sector are likely to follow their own fundamentals, with supply-constrained copper prices still likely to advance. Australia is the world’s third-largest exporter of copper ores and concentrates.
Global copper prices are expected to climb to an average of $7,910 a tonne by 2020, up 22 percent from an average of $6,462 this year, as slower growth in mine supply over coming years falls short of rising demand from energy infrastructure.
As for zinc, of which Australia is the world’s third-biggest producer, high prices have encouraged new mines to start up. That’s expected to squeeze prices to around $2,625 average by 2020, down from $3,155 this year.
Elsewhere, thermal coal spot prices are seen easing into early 2019 as supply rises and demand moderates.
Australia’s resources earnings reached a record $226 billion in 2017-2018, driven by rising exports and also higher prices of some commodities such as coal. Australia expects its commodity export earnings to inch higher to $238 billion by 2018-2019, before easing to $232 billion by 2019-2020 amid falling prices for commodities like iron ore.
Reporting by Melanie Burton Editing by Kenneth Maxwell