The Australian government said on Thursday it expected export earnings from resources and energy to jump 13% from last year to a record A$349 billion ($253 billion) this financial year, fuelled by soaring coal and gas prices.
The Department of Industry raised its outlook for resources and energy export earnings for the year to June 2022 from A$334 billion in its previous report, due to strong commodity prices, volume growth and a weaker Australian dollar.
“Australian iron ore prices look to have peaked, but coal prices have recovered all of their 2020 losses and more, as global shortages emerge,” the department’s Office of the Chief Economist said.
Earnings from iron ore, Australia’s top export, are forecast to fall from a record A$153 billion in 2020-21 to A$132 billion in 2021-22, due to a drop in iron ore prices.
Prices of metallurgical coal, however, have jumped due to supply shortages amid a rebound in steel and auto production in major economies. Met coal prices are now forecast to average $176 a tonne in 2021-22, up from an earlier projection of $163, boosting export earnings by 44% to A$33 billion this year.
Prices of thermal coal, used in power stations, have been revised up to average $98 a tonne this year, which would see export earnings jump 50% to A$24 billion in 2021-22, amid soaring demand in Asia.
LNG export revenue is expected to surge 87% to A$56 billion this year on the back of soaring LNG prices, spurred by strong demand in Europe and China.
“It is expected that China will increasingly turn to the spot market, as a considerable gap emerges between demand and contracted volumes,” the department said.
The report said the forecasts could prove bullish if inflation leads to higher interest rates, demand growth is hit by new outbreaks of COVID-19, or if there are further disruptions to Australia trade with China.
Source: Reuters (Reporting by Sonali Paul; Editing by Rashmi Aich)