Australian Treasurer Joe Hockey said Thursday his government will not set up a parliamentary inquiry into the massive iron ore sector following discussions with regulatory bodies and industry players.

The commodity, which is key to steel-making, is Australia's largest export but has seen its price plunge in recent months amid claims the world's biggest miners are flooding the market to wipe out smaller competitors.

"Over recent days, there has been speculation about whether a parliamentary inquiry into the iron ore sector was necessary," Hockey said in a brief statement.

"After discussing the issue with regulatory bodies and stakeholders across the resources sector, the government will not be initiating an inquiry at this time."

The price of ore dived by 60 percent over the past year to reach a decade low of US$47.08 per tonne in early April, badly hurting Australian government revenue. It has recovered slightly since then to trade at about US$60 per tonne.
Australia's iron ore exports account for 60 percent of the world's sea-borne supply.

Budget figures last week showed that Australia's forecast tax receipts will be cut by Aus$52 billion (US$41 billion) over the four years to 2017-18, largely driven by the commodity's tumbling price.

The Minerals Council of Australia, which represents the nation's resources industry, welcomed the government's decision.

"This is a good decision that will enable Australia's iron ore sector to focus on the task of further strengthening its competitiveness in a fiercely contested global market," the council's chief executive Brendan Pearson said in a statement.

The prospect of an inquiry had been criticised by the world's largest miner, BHP Billiton, on Tuesday, with chief executive Andrew Mackenzie saying it would send "a terrible signal" about the nation's competitiveness and turn off key buyer China.

Andrew Forrest, head of another Australian iron ore producer, Fortescue Metals, has been pushing for an inquiry, backed by independent Senator Nick Xenophon.

Forrest alleged major players BHP and Rio Tinto deliberately increased their production levels to push out smaller rivals which have higher production costs, causing them to struggle to stay afloat amid the challenging conditions.

Analysts have said that softer growth in Chinese demand is also weighing on the iron ore price.

Labor opposition leader Bill Shorten slammed Prime Minister Tony Abbott, who appeared to have been supportive of a potential probe last week, saying his actions had "damaged the industry".

"He must now take responsibility for his actions -– what will he do now to restore investor confidence?," Shorten said in a statement following the Treasurer's announcement, adding that Abbott and his ministers should have addressed the speculation earlier.

"This speculation has given our international competitors an advantage -– they will make the most of this."