From the Office of the Chief Economist, A.K.A. Australian Dirt Propaganda Unit:
The value of Australia’s resources and energy exports is forecast to increase by 12 per cent to $176 billion in 2016–17, revised up from the previous forecast of $163 billion. The upward revision in export values reflects revisions to the underlying price forecasts, not volumes.
This set of forecasts has been prepared against a backdrop of slightly higher prices than in the June quarter. The increase in prices primarily reflects unexpected persistence in the effects from the housing stimulus in China, in addition to weather and infrastructure related supply disruptions.
The most material revisions to the outlook for 2016–17 have been made to metallurgical coal and iron ore. The price of metallurgical coal has been revised up from US$85 a tonne to US$118 in 2016–17, adding $8 billion to Australia’s resource and energy export earnings over the year. The price of iron ore has been revised up from US$43 a tonne (FOB Australia) to US$47 a tonne adding US$4.7 billion to export revenues.
However, the recent price increases in metallurgical coal and iron ore are driven by temporary factors, The price of both commodities is expected to decline from current levels over the outlook period to the end of 2017.
And:
And:
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Australia’s iron ore export volumes are forecast to increase by 8 per cent to reach 851 million tonnes in 2016–17, supported by operational improvements and the ramp up of production at new mines and expansions. Export earnings are forecast to increase by 12 per cent to $54 billion in 2016–17, revised up from the previous forecast of $49 billion. The revision reflects persistently high prices in the September quarter. However, the iron ore price is forecast to decline later in 2016 and average 6 per cent lower in 2017, at US$45 a tonne (FOB Australia).
Despite the upgrade this is still $10 below the Budget of Lies outlook though, admittedly, much of the iron ore miss will be offset by the coal boomlet:
My own view remains FOB $40-45 average in H1. $35 in H2.
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.
