It’s good news for miners, as Australia’s chief economist has forecast Australia’s resource and energy exports to hit $204 billion in FY17, which would be an increase of 30%.
Improved iron ore, metallurgical and thermal coal prices are expected to increase mining revenue, while newly-online LNG export projects will boost export volumes in that sector, the chief economist, Mark Cully, wrote in his December report.
“Continued growth in demand from China’s steel sector, as well as disruptions to the supply of a number of resource commodities, have boosted prices,” he wrote.
“The world economy appears to be picking up speed. At the same time, significant investment in Australia’s productive capacity has supported strong growth in LNG export volumes.”
Cully’s report forecasts a 6% rise in iron ore export volumes, and a 30% rise in value, to $62.2 billion in FY17. Metallurgical coal exports are set to rise 2% in volume, and 102% in value, to $40.0 billion, and thermal coal exports are forecast to rise 4% in volume, and 25% in value, to $18.4 billion.
LNG, meanwhile, is set to rise 42% in volume, and 43% in value, to $27.3 billion.
Healthy growth in the price of gold and Australia’s export volumes will lift overall value 11%, to $17.4 billion, while copper is one of the few resources set to drop, with a 9% decline in export volumes forecast to reduce export value by 6%, to $7.6 billion.
Overall, Cully’s report forecasts a combined export value of $203.9 billion in FY17, up 27.5% in real terms compared to FY16.
But the chief economist is expecting things to calm down over the following 12 months, with a 3% decline in real terms (i.e. taking inflation into account) to $202.2 billion in FY18.
“Unfortunately, the high prices that are expected to bolster Australia’s resources and energy export earnings in FY17 are not expected to last,” Cully wrote.
“The combination of slowing demand growth from China’s steel sector and increased global supplies, are expected to lower unit values in FY18.
“However, the production phase of the mining boom will continue, with export volumes forecast to increase in each of Australia’s top five resource and energy commodities in FY18.
“Most significantly, LNG export volumes are forecast to grow a further 28% in FY18.”