Another Record for Oz Trade Surplus

By Glenn Dyer | More Articles by Glenn Dyer

Thanks to record prices and demand for iron ore – especially from China – Australia’s goods trade surplus hit a new peak of $13.3 billion, the second successive month that it has topped $13 billion.

Australian Bureau of Statistics (ABS) merchandise trade figures also revealed that exports topped $40 billion for the first time. The $41.28 billion worth of products was also the second monthly record in a row for exports after the $38.4 billion in May.

The driver for both was the surge in iron ore prices, followed by record copper prices and the rebound in prices for oil and LNG.

Iron ore prices more than doubled from June, 2020 to June this year, while copper prices surged 37%.

Exports of metalliferous ores (mostly iron ore, followed by copper) reached $20.5 billion, marking a fourth consecutive record monthly increase and making up almost half of Australia’s total exports.

Driving the increase was iron ore, with a record export value of $17.6 billion, and copper ore at $847 million.

The value of iron ore shipments to China rose 7% per cent to a record $14.9 billion, which was predominantly driven by price, which remains well above $US200 per tonne even after Wednesday’s near 3% lurch downwards to $US214 a tonne for 62% Fe fines delivered to northern China.

Imports to Australia jumped 8% to $28 billion in June, led by a 51% increase in fuel shipments (as oil prices continued to rise to close to $US70 a barrel)

This included a 45% increase in diesel and a 46% in crude oil, which lifted petroleum imports back to pre-COVID-19 levels.

Exports in June this year were more than $10 billion more than June 2020, when they were still hit by the impact of the Covid pandemic on demand and supply.

The merchandise trade surplus in June was up 60% from what was a very solid $8.37 billion in June last year,

The value of copper ore (concentrates) jumped $302 million or 55% to $847 million in the month.

The increase was driven largely by an increase in price, up 37%, to above $5.00 per kilogram for the first time on record. Green technologies have been increasing demand for copper amidst limited global supply, the ABS said in Thursday’s release.

The value of coal exports rebounded for another month and have now shaken off the impact of China’s ban.

The ABS said coal exports increased to their highest value since April 2020 driven by hard coking coal, up $332 million (24%) and thermal coal, up $164 million (10%).

Japan and South Korea drove the increases in both coal types as exporters continued to diversify their shipments away from China.

The value of non-monetary gold exports was driven by increases to the UK, up $441 million, and China, up $396 million but partially offset by a $442 million drop in shipments to Hong Kong.

The ABS said the gold shipped to China was “made up almost entirely of gold bullion” and was the second highest non-monetary gold exported to China on record.

The ABS said rise in the value of LNG exports was due to an 18% increase in the price of liquefied natural gas, as quantity declined 4%.

On the import side the ABS said the increase in petroleum was driven by diesel, up 45% $460 million to $1.476 billion and crude oil, up 46% or $232 million.

“Both increases helped petroleum imports return to pre-COVID-19 levels,” the ABS said.

“Throughout the pandemic diesel import quantities have remained relatively steady, as domestic trucking and mining sectors were minimally impacted by lockdowns. By comparison the quantity of crude oil imports declined substantially during COVID-19 and remain well below pre-COVID-19 levels.”

Imports of road vehicles increased to a record high of $4.244 billion, up more than $2.6 billion.

“This was driven by increases across several vehicle categories as Australian car dealerships report ongoing strength in domestic demand, despite the global semi-conductor shortage continuing to impact manufacturing,” the ABS said.


About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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