The September quarter was one of typical significant volatility in resource and energy commodity prices, according to a report by the Australian Government Department of Industry and Science. Prices for steelmaking raw materials and some of the base metals rose notably through most of the quarter, before suffering a sharp setback in the second half of the month of September. As usual, the swings related largely to moves in market sentiment in relation to the Chinese economy.
Buoyant prices for steelmaking commodities and thermal coal, and increased LNG export volumes, are expected to see Australia’s resource and energy export earnings increase by two percent in 2017–18, to a record $211 billion, the report stated.
The forecast for Australia’s resources and energy export earnings in 2017–18 has been revised up by $4.1 billion (two percent) to $211 billion. The upward revision primarily reflects higher-than-expected prices for metallurgical coal, alumina and gold than forecast in the June 2017 Resources and Energy Quarterly.
Australia’s iron ore export earnings increased by 32 percent to $63 billion in 2016–17, driven in large part by higher prices. The value of Australia’s iron ore exports is forecast to decline to $54 billion in 2018–19, as the impact of forecast lower prices offsets volume gains.
The iron ore price is forecast to decline to US$49/mt (FOB Australia) in 2019, due to growing low-cost supply from Australia and Brazil and moderating demand from China. Australia’s iron ore export volumes are forecast to rise from 819 million mt in 2016–17 to 887 million mt in 2018–19, as a result of ongoing productivity gains and new additions to capacity, according to the Australian government report.