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How China will FINALLY cripple Australia with its trade war in 2022 – with prices for our biggest export set to continue to drop

  • Westpac expects iron ore and coal prices to continue falling in 2022 and 2023
  • Iron ore prices have halved since late July, but coal prices have hit an all-time high
  • More Brazilian iron ore set to boost global supply and drag prices










China could finally cripple Australia with its trade war as commodity prices collapse in 2022.

While iron ore prices have halved since July, it happened when coal prices hit record highs in October, with China suffering widespread blackouts.

Australia has benefited from rising commodity prices even as China imposed punitive tariffs on barley, timber and seafood, in retaliation for calls for an investigation into the origins of Covid.

But in 2022, Westpac Bank expects prices for iron ore and coal to drop.

China could finally cripple Australia with its trade war as commodity prices collapse in 2022 (pictured Chinese President Xi Jinping with North Korean leader Kim Jong Un)

The world’s main suppliers of iron ore

AUSTRALIA: 37%

BRAZIL: 16%

CHINA: 12%

INDIA: 10%

RUSSIA: 5%

Source: Western Australia Department of Employment, Tourism, Science and Innovation

Senior economist Justin Smirk said high commodity prices this year simply encouraged other countries to increase production, which in turn would increase global supply.

“There is an old adage in commodity markets that high prices are the cure for high prices,” he said.

“The current market has significant potential for a strong supply response to be combined with demand becoming more sensitive to higher prices. “

Since the end of July, iron ore prices have halved from over US $ 200 per tonne to US $ 84.61 in November as China, Australia’s largest trading partner, has reduced its steel production.

The failure of apartment builder Evergrande would also cause panic in China’s real estate sector and further reduce demand for steel.

Prices in December recovered to US $ 102.50, but Westpac expects the spot price for iron ore to fall to US $ 77 by December 2022 and to US $ 64 by September 2023 .

Brazil, the world’s second largest producer of iron ore after Australia, has suffered since the collapse of the Vale tailings dam in 2019.

Almost three years after this disaster, the South American nation is recovering, with increased production in the past three months, increasing supply and weighing on prices.

Westpac senior economist Justin Smirk said high commodity prices this year simply encouraged other countries to increase production, which in turn would increase global supply.  He expects the spot price of iron ore to fall to US $ 77 by December 2022 and to US $ 64 by September 2023 (Pictured, Fortescue Metals Group Chairman Andrew Forrest, with Prime Minister Scott Morrison)

Westpac senior economist Justin Smirk said high commodity prices this year simply encouraged other countries to increase production, which in turn would increase global supply. He expects the spot price of iron ore to fall to US $ 77 by December 2022 and to US $ 64 by September 2023 (Pictured, Fortescue Metals Group Chairman Andrew Forrest, with Prime Minister Scott Morrison)

“This should keep iron ore prices under pressure in the near term,” Smirk said.

“It takes around 45 days for Brazilian iron ore exports to reach Chinese ports, this supply is expected to keep downward pressure on iron ore prices.”

Spot coal prices in October hit a record high of US $ 269 as China suffered widespread power outages as Australian coal vessels were stranded outside key ports.

The Newcastle futures price has since moderated to US $ 163 per tonne and Westpac expects prices to dip another third to US $ 113 by December 2022 and to US $ 103 by March 2023, the recent floods affecting the supply.

“Weather-induced shocks to Australian coal exports will be short-lived, with coal prices expected to fall between 24 and 33 percent,” Smirk said.

Spot coal prices in October hit a record high of US $ 269 as China suffered widespread power outages as Australian coal vessels were stranded outside key ports.  The Newcastle futures price has since moderated to US $ 163 per tonne and Westpac expects prices to dip another third to US $ 113 by December 2022 and to US $ 103 by March 2023, recent flooding affecting supply (pictured is a freight train at Kooragang in Newcastle)

Spot coal prices in October hit a record high of US $ 269 as China suffered widespread power outages as Australian coal vessels were stranded outside key ports. The Newcastle futures price has since moderated to US $ 163 per tonne and Westpac expects prices to dip another third to US $ 113 by December 2022 and to US $ 103 by March 2023, recent flooding affecting supply (pictured is a freight train at Kooragang in Newcastle)

Australia has benefited from rising commodity prices even as China imposed punitive tariffs on barley, timber and seafood, in retaliation for calls for an investigation into the origins of Covid.  But in 2022, Westpac Bank expects prices for iron ore and coal to drop.

Australia has benefited from rising commodity prices even as China imposed punitive tariffs on barley, timber and seafood, in retaliation for calls for an investigation into the origins of Covid. But in 2022, Westpac Bank expects prices for iron ore and coal to drop.

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