Worst case scenario. An Aussie external shock is building

Monday, 5 August 2019

The thing about terms of trade booms in bulk commodities is that they are highly volatile. While everybody is today reporting on spectacular rises in iron ore and coking coal plus record mining dividends over H1, the arse has well and truly begun to fall out of the boom already in H2.

Australia’s terms of trade are roughly 60% iron ore, coking and thermal coal and all three are imploding.

Iron ore is down 15% from its peak:

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About the author

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.