For the first time in two years, Australia’s goods trade surplus sank under the $2 billion level, according to the Australian Bureau of Statistics (ABS).
And you can blame China for that fall – both on the export and the import side.
The preliminary data, released just before Christmas, is a warning of what we could see in 2021, a continuing weakness in the trade account as China.
The ABS said the surplus of $1.958 billion more than halved in November from October’s $4.7 billion.
The change in the surplus was impacted by a $1,218 million (10%) in exports to China combined with a $889 million (11%) increase in imports from China.
The fall in exports is explained by the barriers and orders to Chinese power stations and steel mills to stop using Australian coal, China is also discriminating against Australian exports of meat, wine, barley and honey.
But the big driver was a $851 million fall in the value of exports of iron ore in November. That was due to the fall in shipments through Port Hedland, especially the drop experienced by the Roy Hill mine which has doing maintenance on its port facilities.
At the same time the rebound in the Australian economy drove imports from China higher, along with the continuing strong demand for PPE equipment and gear generated by COVID.
ABS Head of International Statistics, Branko Vitas said: “An 11 per cent increase in imports and a small increase in exports has more than halved the goods trade surplus this month. This is the first time since November 2018 that the goods trade surplus has dropped below the $2 billion mark”.
Total exports increased $166 million (1%) in November 2020 to $30.510 billion. Key drivers of the increase were a $746 million (39%) increase in exports of non-monetary gold, mostly to Singapore, and a $368 million (16 per cent) increase in exports of gas.
The rise in gas shipments was the second in a row after the $360 million jump in October (which was the first rise for six months).
“It’s not unusual to see large non-monetary gold exports to Singapore,” said Mr Vitas, “especially since 2012 when Singapore removed the GST from investment-grade precious metals”.
Increases in exports of gold coin and oil seeds also helped the goods trade surplus. Gold coin shipments rose $143 million or 153% more than reversing the big $124 million fall in October. The rise came in shipments of coins to Germany, the ABS explained.
Exports of oil seeds jumped $142 million, as the canola export season started.
Offsetting these increases, metalliferous ores dropped $1.2 billion (9%) with iron ore contributing substantially, down $851 million or 8%, following October’s record high. The ABS said iron ore export volumes fell 8%.
Shipments of metalliferous ores rose $658 million to a new high in October
Coal exports also fell, down 8% or $254 million, with hard coking coal leading the decline, down $186 million (11%) and thermal coal also down, declining 13% or $161 million – all thanks to
Imports jumped 11% or $2.9 billion to $28.6 billion in November.
“This is the fifth highest monthly imports value on record” said Mr Vitas. “It was driven by transport equipment, up $1.1 billion (462 per cent), almost all of which was aircraft from Australia’s second largest imports source country, the United States of America”.
Further driving the increase in imports value was telecommunications and sound equipment, up $548 million (33 per cent), predominantly mobile phones from China, and road vehicles, up $258 million (up 8%), the ABS said
The strength seen in road vehicle imports in recent months represents a substantial rebound from the relatively low trade observed earlier in the year due to COVID-19.
Around 30% of the $2.8 billion increase in imports was due to a rise in the value of aircraft imported from the US.
The ABS said that in November transport equipment increased $1.121 billion (mostly aircraft) (462%, telecommunications and sound equipment increased $548 million (33%), road vehicles increased $258 million (8%).
“Within transport equipment, aeroplanes and other aircraft drove this increase, up $1,050 billion due to the import of a number of aircraft from the USA.
“Within telecommunications and sound equipment, mobile phones increased $446 million (87%) after a $270 million (111%) increase last month.
“These increases align with the release of new mobile phone models,” the ABS remarked.
Road vehicle imports (cars, SUV’s etc) increased in November 2020 to the highest monthly value ($3.66 billion) since June 2018 – most of it catch up to previously missed imports due to delays caused by COVID at car plants offshore.
“This increase is the sixth consecutive monthly increase since the sharp decline observed in May 2020 due to the pandemic,” the ABS noted.
“Despite the strong November result, imports for the calendar year to November 2020 are relatively weak compared with the equivalent periods from previous years,” the Bureau added.
Other notable increases included an 18% rise in imports of office and ADP machines, up $176 million. Most of these machines came from China as did a rise in imports of mobile phones.
The ABS said the increase to office and ADP machines was driven by laptops, which increased $113m million (or 25%).
“The strong November result is in line with a seasonal pattern that can be observed in most years with imports of office and ADP machines increasing in the months leading up to Christmas,” the Bureau said.
That’s a sign of the strength of demand retailers expect in the November-Christmas-New Year sales.
