AUD: Demand for Australian iron ore is rising – HSBC

By FXStreet FXStreet (Delhi) – Paul Bloxham, Chief Economist at HSBC Global Research, notes that slower growth in China and a downturn in the mainland property market have seen falling demand for iron ore, as might be expected but demand for Australian iron ore has continued to rise and the reason is that Australia is the lowest cost producer in the global market.

Key Quotes

“Australian iron ore export volumes to China have risen by 8% y-o-y, while China has cut back on its own higher cost domestic production, which has fallen 8% y-o-y. Steady demand for higher grade/lower cost iron ore, largely from Australia, has seen the iron ore price remain steady at around USD50-60 a tonne for the past three months. We are forecasting the iron ore price to remain around this level over the next year or so. Although the overall iron ore story is a challenging one, Australia is faring reasonably well.”

“Falling commodity prices have taken their toll on a range of commodity-producing countries, with GDP declining in Canada, Brazil, Russia and South Africa in recent quarters. The Australian story has, so far, been a bit different, with GDP continuing to rise.”

“Most importantly, Australia is the lowest cost producer …read more

Source:: FX Street