Iron ore is forecast to be the first Australian commodity to hit $100 billion in export earnings in a year. According to a report in The Australian, Australia could see a 28% annual lift in iron ore earnings in 2019–20, reaching $101 billion.
Among market turmoil and fears of a coronavirus-invoked global economic slowdown, the iron ore price is holding up. Still trading near US$90 a tonne, the steel-making ingredient remains in demand. High prices plus a boost in supply to 877 million tonnes could combine to set the new commodity export record, according to The Australian article.
ASX 200 miners BHP Group Ltd (ASX: BHP), and Fortescue Metals Group Limited (ASX: FMG) are among those set to benefit from the boom. Longer term, it is predicted that exports could come close to the 1 billion tonne level by 2024–25, with China as Australia's biggest commodity buyer.
Now that it appears coronavirus has peaked in China, factories are restarting and demand for the resource is expected to rebound. As reported by The Australian, Australia's Department of Industry, Science, Energy, and Resources assumes the vast majority of Chinese workplaces will be fully operational by the end of June 2020.
The article reports that iron ore stocks at ports in China are running at around 120 million tonnes, down from record highs of over 160 million tonnes two years ago. BHP and Fortescue are reportedly shipping strong volumes.
Australia is also set to overtake China as the world's biggest gold producer in 2021 as high prices boost production, with gold exports forecast to soar. As interest rates fall ever lower, the opportunity cost of holding gold is lowered, increasing its attractiveness to investors.
The price of the precious metal has been extremely volatile in recent days, veering between $2,430 an ounce and $2,560 an ounce. Nonetheless, the price has increased markedly since January, when it was trading it around $2,175 an ounce. The price increase should fatten the margins of ASX gold miners including Newcrest Mining Limited (ASX: NCM), Northern Star Resources Ltd (ASX: NST), and St Barbara Ltd (ASX: SBM).
The gold miners are some of the few ASX shares that have largely escaped the current market rout, with Newcrest up 1.62% yesterday, Northern Star Resources up 7.82%, and St Barbara up 8.95%. The gold price could well outperform in the near term if the impacts of coronavirus continue to amplify.
Foolish takeaway
Despite current turmoil on the ASX, certain commodities are holding up. Iron ore and gold prices remain buoyant, providing a degree of comfort in otherwise turbulent times.
