Australia’s resources and energy export earnings grew rapidly in the financial year 2016-17 ended June 30, rising by 25 percent to $205 billion, based on preliminary estimates, according to a report by the Australian Government Department of Industry and Science. However, resource and energy export earnings are forecast to decline marginally in the financial years 2017-18 and 2018-19. Declining prices are expected to more than offset the impact of rising export volumes.
Since the March 2017 Resources and Energy Quarterly, the value of Australia’s resources and energy export earnings in 2016-17 has been revised down by $9.9 billion (4.6 percent) to $205 billion. The downward revision primarily reflects an earlier than expected decline in iron ore prices since the March 2017 Resources and Energy Quarterly.
Australia’s iron ore export earnings for 2016-17 have been revised down by $7.5 billion from the forecast in the March 2017 Resources and Energy Quarterly, to $65 billion, reflecting an earlier than expected decline in the iron ore price. This nevertheless still represents an increase in export earnings of 33 percent on 2015-16.
The iron ore price has been revised down slightly for the next three years. Higher prices at the end of 2016 and start of 2017 stimulated additional supply, placing additional downward pressure on prices. The iron ore price is now forecast to average US$62/mt (FOB Australia) in 2017. With demand expected to be steadily outpaced by the growth of low-cost supply, the price is forecast to decline to US$48/mt in 2018 and to US$47/mt in 2019. Australia’s export earnings are forecast to decline to $58 billion in 2017-18, and $55 billion in 2018-19.