AUSTRALIA’S resource and energy export earnings are estimated to have reached a record $226 billion in 2017–18, driven by rising LNG exports.
Exports are projected to rise further in 2018–19 to $238bn, before easing slightly in 2019–20 to $232bn as prices edge down.
The figures were published in the June 2018 edition of the Resources and Energy Quarterly, released by the Department of Industry, Innovation and Science.
Key findings from the report show export values supported by strong prices for several key commodities.
Thermal coal prices rebounded in the June quarter, while iron ore prices held up strongly as Chinese steel production rose.
LNG prices are strong and expected to grow further, as demand rises for flexible dispatchable energy. Prices for base metals are strengthening, with demand for copper and nickel particularly strong.
Commodity prices have followed a clear trend over the past 10 years, rising largely in unison during the early days of the commodity boom, and then easing back as new investment and supply followed. Commodity prices now are following a less unified trend, however, with growth in some offsetting falling prices in others. Trends in global industrial production will continue to play a significant role in commodity demand moving forward.
Growth in global industrial production and manufacturing output appears to have peaked in the first half of 2018, suggesting that resource commodity prices may generally have set their highs for the cycle. However, it is likely that prices will continue to diverge among different commodities in response to different pressures.
This edition of the Resources and Energy Quarterly includes a special analysis on Australia’s future as an LNG exporter. It examines Australia’s influence in Asian LNG trade and its potential future as a simultaneous importer and major exporter of gas.
Exports of liquefied natural gas (LNG) are set to be the biggest driver of growth over the next two years, with the last three remaining LNG mega projects currently under construction — Wheatstone, Ichthys and Prelude — set to be completed this year.
Chief Economist for the Australian Department of Industry, Innovation and Science, Mark Cully said higher prices for metallurgical and thermal coal, supported by production cut-backs in China, are expected to bolster export earnings.
“And despite lacklustre prices, growing iron ore export volumes will also make a significant contribution,” he said.
The outlook for base metals has improved in recent quarters, partly a result of growth in infrastructure in parts of emerging Asia, Mr Cully said.
“However, improving technology and demand for renewable energy is also creating strong conditions for metals such as nickel and copper, which are heavily involved in energy transmission and storage,” he said.
The latest edition of also examines why Australia could become the world’s largest LNG exporter at the same time it becomes an LNG importer.
In good news for LNG exporters, the report detailed resurgent global oil prices are set to deliver an $8.1 billion windfall to export revenue over the next two years.
Boosted output and higher prices are set to hel boost export revenues to a record $238bn this financial year.
Minister for Resources and Northern Australia Matt Canavan said strong demand and prices for iron ore, coal and liquid natural gas (LNG) in particular were pushing total exports from the sector to the new records.
“The prediction is that the 2018-19 figure will be $12 billion higher at $238 billion, with continuing strong demand for high-quality Australian coal seeing coal regain its traditional position as our single most valuable resource export,” Minister Canavan said.
“That will see coal reclaim its place at the top of Australia’s export earners – a position it held for decades until it was supplanted by booming iron ore exports in 2010 – and is great news for the major coal-producing States of Queensland and New South Wales.
“It is likely coal and iron ore will continue to fight it out for the title of Australia’s top export-earner in coming years, while LNG will also perform strongly.