- Joined
- 3 July 2009
- Posts
- 27,351
- Reactions
- 24,087
Add to that the forward projections and someone is wrong.Respectfully disagree @Value Collector - that correlation doesn't appear to have been the case this calendar year - a closer correlation between FMG and iron ore (either TSI or TIO) appears to be the case:
Way too many moving parts in Australia's economy at the moment, for my liking and none are increasing our competitiveness.
New government data projects a significant downturn for mining over the next four years, which could impact ASX mining shares.
The Federal Government delivered its Mid-Year Economic and Fiscal Outlook on Wednesday.Â
According to the ABC, the Government is forecast to suffer a $8.5 billion hit to its tax take over four years from a loss of mining export revenue.
Wednesday's update to the Federal budget will reveal a $100 billion downgrade in mining exports by Treasury over the four years to 2027-28.
The blow reflects the drop in demand for iron ore and other commodities as Australia's largest trading partner, China, struggles to shore up its deteriorating economy.
China's shifting demand
China has historically been Australia's largest export destination, particularly in natural resources.According to ANZ, the relationship between China and Australia remains heavily reliant on iron ore, liquid natural gas and coal. These resources represent 80% of the country's exports to China.Â
However, economists anticipate this to shift in the near future.
The Reserve Bank of Australia reinforces this view. The central bank projects that China's demand for Australian iron ore will fall by 80% by 2050.Looking ahead, the green transition, plus China's protracted property sector woes and shrinking population will lead to even weaker steel consumption, weighing on iron ore demand.
Furthermore, according to BP, the share of coal used for power generation in China is forecast to fall from 63% in 2022 to 14% in 2050