As expected, Australia’s trade account worsened in May. But what was not expected was the extent of that worsening.
The trade account remained in the red for a second month, thanks in part to a sharp fall in exports of steel making grade coal to China, according to the Australian Bureau of Statistics.
The deficit for May was a seasonally adjusted $1.9 billion, compared to a $780 million deficit in April (revised down from an originally reported $891 million), the ABS reported yesterday.
That was the biggest trade deficit in 17 months and helped push the dollar under the 95 cent level it had reached the night before in offshore trading.
The dollar was trading under 94.40 US cents in Asia this morning.
That was an increase of $1,131 million (145%) in the deficit in April 2014.
The value of exports fell 5% in May, while imports were down 1%, seasonally adjusted.
The fall in imports fell because of a drop in capital goods, which is consistent with the dying embers of the huge resources investment boom.
Exports fell because of lower prices for some coal types and the volume of coking coal shipments to China (which couldn’t be made up by higher export volumes).
The ABS said exports of non-rural goods (minerals and fuels mostly) fell 6% or $1.184 billion to $17.576 billion, seasonally adjusted.
The main components contributing to the fall in seasonally adjusted estimates were a 9% or $760 million fall in the value of exports of metal ores and minerals, down $760 million (or 9%), and a 13% or $352 million drop in the value of exports of other mineral fuels.
The ABS said that the largest movements recorded for the following selected commodities were:
- Lump iron ore exports were up $51million (3%), with volumes up 4%, exports to Taiwan rose $43 million (or 72%), with quantities up 79% and unit values down 4%.
- Iron ore fines rose $285 million (6%), with quantities up 2% and unit values up 4% (this represents exports to China’s voracious steel mills).
- That was confirmed by a 9% rise in exports to China worth an extra $344 million, with quantities up 3% and unit values up 6%.
- Partly offsetting this rise was a 21% drop in the value of exports to South Korea, down $92 million, with quantities down 19% and unit values down 3%.
- Exports of hard coking coal for the steel industry fell $138 million, or 10%, with quantities down 8% and unit values down 2%.
- Exports to China led the fall, dropping 53% or a massive $240 million, with quantities down 52% and unit values down 3%.
- Partly offsetting this fall was exports to Japan up $77million (or 34%), with quantities up 40% and unit values down 4%.
- Semi-soft coal exports rose $16 million (or 3%), with quantities up 4% and unit values down 1%.
- Exports to Brazil rose $23 million (171%), with quantities up 183% and unit values down 4%.
- Thermal coal exports rose 5% or $60 million, with quantities up 4% and unit values up 1%. Exports to Japan rose $64 million (or14%), with quantities up 16% and unit values down 2%.
