OREANDA-NEWS. July 03, 2015. The Australian government has lowered its forecast on average iron ore prices in 2015 to \\$54.50/mt FOB, down 10% from \\$60.40/mt FOB earlier, according to the Department of Industry and Science's latest quarterly update released Tuesday.

An expected 10% increase in Australian iron ore exports in 2016 to 824 million mt will put additional pressure on prices, which the government predicts will average \\$50.90/mt FOB, down 8.5% from its March forecast of \\$55.60/mt FOB.

The department noted that iron ore exploration investment in Australia fell 29% year on year in the March quarter to A\\$82 million (\\$70 million), which it attributed to falling prices.

"Producers have been more focused on cutting costs than identifying new deposits," it said in its June quarter report.

The department said it expected the global iron ore trade to reach 1.4 billion mt in 2016, up from the 1.3 billion mt expected in 2015 on the back of additional tonnages from Vale, Rio Tinto and BHP Billiton, along with newcomers such as Roy Hill in Western Australia

Brazil is forecast to lift its exports by 5.7% next year to 412 million mt, while Canada and South Africa will be the big losers with exports falling 9.9% and 11.2% respectively.

Australia's metallurgical coal prices are expected to average \\$103.60/mt FOB this year and fall to \\$100.70/mt FOB in 2016.

The department has forecast Australian met coal production at 193 million mt in the 12 months to June 30, 2016, up 2.8% from 188.1 million mt a year earlier.

Production cuts announced by miners operating in Australia, including Peabody Energy and Glencore, will be "more than offset by increased production from completed projects, such as [Whitehaven Coal's] Maules Creek," the report said.

The department noted that China's total met coal imports fell 25% year on year over January-April this year to around 15 million mt as steelmakers stayed away from imports due to the "risk of prices declining rapidly during transit."