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Higher Australian dollar hurts commodity export earnings

by wallacep created Dec 15, 2009 01:07 PM

Earnings from energy and minerals exports are forecast to fall by 20 per cent to close to $129 billion in 2009-10, according to the Australian Bureau of Agricultural & Resource Economics (ABARE).

  
Higher Australian dollar hurts commodity export earnings

 

“The combined effect of lower bulk commodity contract prices, including for coal and iron ore, and an assumed stronger Australian dollar is expected to more than offset the positive effect on earnings of forecast higher export volumes in 2009-10,” said Dr Terry Sheales, deputy executive director, ABARE.
This latest figure for mineral resources exports represents an upward revision from the $123 billion forecast released by ABARE in September.
The value of energy exports is forecast to fall by 31 per cent to around $54 billion in 2009-10. For metals and other minerals, export earnings are forecast to decline by 10 per cent to around $75 billion in 2009-10.
Australian mine production is forecast to rise by 7 per cent in 2009-10, with increases in both energy commodities and metals and other minerals outputs.
Total earnings from Australia’s commodity exports are forecast to fall by 18 per cent to $163 billion in 2009-10, following a rise of 33 per cent to $197 billion in 2008-09.
Restarts in domestic production and an end to restocking may contribute to slowing growth in import demand for mineral commodities in China in 2010, according to ABARE. Although domestic consumption of mineral resources remains high in China, imports of most base metals, including copper, aluminium, nickel and zinc, declined in the September quarter 2009.
In 2010, prices for most minerals and energy commodities are forecast to be higher in year average terms. However, the increase in minerals and energy prices in 2010 is not expected to be large, especially given the price gains that have already occurred and the assumed gradual recovery in OECD economic growth.
The index of minerals and energy export prices, in aggregate, is forecast to decrease by 26 per cent in 2009-10. The index of energy minerals export prices is forecast to decrease by 38 per cent, which mainly reflects forecast lower contract prices for thermal coal and metallurgical coal for Japanese Fiscal Year 2009 (JFY, April 2009 to March 2010).
The index of metals and other minerals export prices is forecast to decrease by 15 per cent, as lower export prices for iron ore are expected to more than offset higher export prices for other commodities.
Exports of iron ore from Australia are forecast to jump 9 per cent to 394 Million tonnes (Mt) next year, with iron ore production expected to increase by 20 per cent to 425Mt.
Australian gold production is forecast to rise by 13 per cent to 246 tonnes (t) in 2009-2010, with exports forecast to drop 6 per cent to 412t.
ABARE expects copper exports to fall by 11 per cent to 753,000t, with refined copper export volumes tipped to fall by around 28 per cent to 261,000t.
ABARE warned that while the outlook for 2010 is generally positive for mineral commodities, there is considerable uncertainty surrounding commodity price movements. Slower than expected world economic growth, and hence, minerals and energy commodity demand, could result in actual price outcomes being lower than currently forecast.

 





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