LNG, Coal Drive Record Resource Exports
Australia’s resource and energy export figures are on track to set a new record of $226 billion in the year to last Saturday, June 30.
If that figure is reached, it will be a rise of $21 billion, or just over 10% and helps explain why our terms of trade and national income has picked up, but sadly this has not translated into wage growth.
And the way oil, gas and coal prices are showing renewed strength, they could rise even higher in 2018-19, according to the June quarter outlook for metals and energy commodities from the Federal Department of Industry.
The Department’s June 2018 Resources and Energy Quarterly - forecasts that the 2018-19 figure will be $12 billion higher at $238 billion.
"The value of Australia’s resource and energy exports is projected to decline in 2018–19 and 2019–20, falling back to $216 billion, the report says.
"The main driver is expected to be a decline in the iron price, as new low-cost supply enters the market and demand growth moderates — a result of declining steel production in China.
"The forecast fall in both metallurgical and thermal coal prices from recent highs will also weigh on export earnings. Demand growth is expected to slow for coal, and low-cost supply will return to metallurgical coal markets after numerous disruptions. Price declines in iron ore and coal will be partly offset by growing LNG exports.
"The remaining three Australian LNG projects under construction are scheduled to be completed by the end of 2018, potentially making Australia the largest LNG exporter in the world in 2019.”
"LNG is expected to be the largest contributor to the growth in export earnings, followed by metallurgical coal and thermal coal. Iron ore, oil and a number of base metals will also make a significant contribution,’ the report said.
“The downward trend in prices that occurred in the 2012–2015 period is expected to resume again in 2018, though with a smaller rate of decline over a shorter time period.
"Prices are expected to stabilise in the longer term, as the mismatches in supply and demand that have characterised the last 15 years gradually even out, and remain well above levels in the years before 2005,” the report says.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.