Record exports

ABS trade figures are out today and there’s no doubt about it, August was a cracking month, posting a big jump to record export revenues above $28 billion for the first time and delivering a surplus of $3.1 billion, the second highest ever. The good news came from one primary source, iron ore:

As you can see from the top chart, the last time we posted record exports, was at the 2008 cliff’s edge. There has already been some softeing in the ore price, and more in the swaps market (I’ll try to get a chart of that later). And backing that up, the LME steel price has also taken a beating since August, clearly busting its uptrend:

Nonetheless, combined with this morning’s building approvals, it’s been a good day for the economy.

Houses and Holes
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Comments

  1. Just remember the composition of our exports (by value)
    Iron ore – 24%
    Coal – 17%
    Gold – 6%
    Natural gas – 5%
    Petroleum oils – 4%
    Wheat – 2.5%
    Copper – 2.5%

    Yes, that is 60% of our exports in just these commodities – and the latest price trends are not looking good.

    As your graph shows H&H, it won’t take much of a movement in coal and iron ore prices to reverse this trend.

      • Just quickly, the balance of trade is one sub-account of the current account. The other two reported by the ABS are the primary and secondary income accounts (flow investment returns and interest payments to foreign owners of assets/debt).

        The capital account balances the current account and is a record sales of assets (financial or physical) between local and foreign owners.

        While the trade balance is currently positive (we export more than we import) this has only been the case during the two recent terms of trade peaks.

        The income accounts have been in deficit by $10-14billion per qrtr over the past 8 years, keeping the current account in deficit (despite the recent rade surpluses)

        It takes a lot of trade suplus to catch up with that. And ironically, the trade suplus can feed into the income account deficit when profits from miners head to their foreign owners.

    • Australia only deals in miracle commodities — iron ore and coal.

      Pity the poor Saudis with all that useless oil they have. I mean, who needs oil? Just stick a hole in the ground anywhere and it comes gushing out.