The outlook for Australian exports has been downgraded, said Australia's central bank, reflecting lower resource exports in the short term and lower services exports in the future.
Resource exports are forecast to return to around productive capacity over the second half of 2021 as maintenance and weather-related disruptions, which have affected combined coal and iron ore exports, are resolved, the Reserve Bank of Australia (RBA) said in its latest quarterly statement on monetary policy.
This follows Australia trade data for June and for the 2020-21 fiscal year to 30 June showing record exports of A$395.58bn ($290bn), up from the previous fiscal year record of A$382.18bn in 2019-20. The strong export receipts were underpinned by recordiron ore export receipts of A$151.96bn in 2020-21, up from the previous record of A$102.88bn in 2019-20.
The bank did not provide any public forecasts for Australian exports.
Australian services exports are forecast to remain at subdued levels for longer than previously anticipated, and are expected to begin increasing from mid-2022 when international borders are assumed to reopen, the RBA said. But the increase in rural exports is forecast to be sustained as global demand conditions strengthen and continuing favourable weather conditions support a faster than expected herd rebuild and strong cereals exports.
Persistent weather-related disruptions and maintenance at some Australian mines and ports contributed to elevated iron ore prices, the RBA said. But prices have since fallen following signs that Chinese authorities will reduce steel output over environmental concerns and as temporary supply issues ease.
"Analysts have noted that the recovery in supply from Brazil and easing demand from China could weigh on prices over the remainder of the year," the RBA said.
Argus assessed the ICX iron ore price at $171.30/dry metric tonne (dmt) cfr Qingdao on a 62pc Fe basis on 6 August, up by $0.70/dmt from the previous assessment and below its high of $235.55/dmt on 12 May.
Firm global steel production and elevated steel prices have also supported the price of coking coal, which has almost doubled from the previous RBA monetary statement in May. Indian demand for coking coal has rebounded as domestic Covid-19 restrictions have been eased and steel mills have started to restock.
Argus-assessed Australian premium hard coking coal prices on a fob basis rose by $3.25/t to $219.25/t on 6 August, and up from $107.15/t at the end of April.
The price of some base metals, notably zinc and copper, remain elevated, supported by the continued recovery in global industrial production, the RBA said. "But they have eased in recent months, partly in response to China releasing government reserves of industrial metals in an effort to ease price pressures," it added.
The Newcastle thermal coal spot price has increased further since the previous monetary statement in May to its highest level in 12 years. The Argus-assessed high-calorific value NAR 6,000 kcal/kg was up by $2.09/t from the previous week to $153.99/t fob Newcastle and up from around $88/t fob Newcastle at the end of April.
Source : https://www.argusmedia.com/en/news