The combination of overcapacity, slowing consumption growth and a stronger US dollar have led most mineral and energy commodity prices to decline in the past year. As a result Australia’s export earnings are estimated to have decreased in 2014-15 despite growth in export volumes. In 2014-15 export earnings from resource and energy commodities are estimated to have declined by 11 per cent (year-on-year) to $174 billion. This fall in export revenue is partly due to a 27 per cent decline in export earnings from iron ore, a 7 per cent decline in metallurgical coal and a 6 per cent decline in thermal coal export values. Export earnings are forecast to increase to around $178 billion in 2015-16 with a small increase in mineral export earnings and a larger increase in energy export values. Higher energy export earnings will be underpinned by the start of LNG production in Queensland.
New prices are iron ore at $59, $107 for met coal, $68 for thermal coal and Brent oil at $68 with LNG contfact sourn $10mmBtu. All too high as usual. Back in the real world we can look forward to more like $45, $90, $55 and $9.
Therefore aggregate resource export revenue will fall next year despite (and because of) all of those nice volumes. Full report.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
