Australia is turning bullish over an economic pick-up in China, its biggest export market for resources and other commodities.
The Bureau of Resources and Energy Economics (BREE) has upgraded its forecast for China’s demand for iron ore, a key raw material for steel, to about 872 million metric tons in 2014, up 8.3 percent from its June estimate.
However, the average price of iron ore is likely to fall next year despite a rosier outlook for China’s urbanization program, BREE said in its latest quarterly report. Also, Australia’s production capacity is expected to increase.
That offers Chinese steelmakers an opportunity to replenish their inventory.
With expectations of increased seaborne imports, it is only a matter of time before demand grows for dry bulk shipping. That’s good news for China COSCO Holdings Co. Ltd. (01919.HK), the country’s largest marine freight fleet, which is anxious to get over a protracted industry downturn.
China COSCO reported a loss of 990 million yuan (US$162 million) in the first six months, down 80 percent from a year earlier, thanks to a timely non-recurring gain from the sale of assets to its parent.
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