Australia’s iron ore miners are riding high as strong demand and short supply overseas continue to keep prices high with indication the nation's federal budget can to return to surplus within a few years.
With all the hoo-ha over wine and cheese, Australia sends around 85 per cent of its most valuable export - iron ore to China.
With ever-increasing hunger for the red metal, China consumes more iron ore than any other nation as it is the largest steel producer.
China also produces vast amounts of iron ore locally but the low grade of its domestic ore makes it more expensive for steel-making than exports.
While Australia is hugely dependent on the iron ore export revenue, China has also failed to replace Australian iron ore despite increased imports from Brazil, India and West Africa.
China's increased demand is mostly linked to its coronavirus stimulus packages as it targets steel-intensive projects like rail, airports, bridges, and ports.
Therefore, the iron ore price is expected to gradually stabilize around US $130-$150 in the coming 6 month and end up near US $100 in two years.
