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Records tumble as iron ore, copper exports boom

The global economic recovery, a rush to make renewable energy and insatiable appetite from China has sent Australian mineral exports to a record high, including iron ore which now accounts for 39 per cent of all goods exported.

Australia’s trade surplus hit $8.4 billion as overall metalliferous ores reached a record high in March of $16.4 billion, with iron ore up 21 per cent, copper ore up 62 per cent, and coal exports increased $272 million, or 9 per cent, according to the Australian Bureau of Statistics.

Exports to China leapt 17 per cent or $1.9 billion in March, largely driven by huge iron ore volumes to China, which alone were up $1.3 billion to $10.1 billion for the month.

The increase fully offset the February decline in iron ore exports, with iron ore volumes up 5.25 million tonnes, or 11 per cent, and prices rising 3 per cent. Iron ore prices have since reached new highs in April of $US195 per tonne.

In the last 12 months, the price of iron ore has more than doubled, driven almost entirely by China.

Broker Macquarie declared the spot market has “scope” to hit $US200 a tonne, although its actual forecasts are lower, at $US140 for 2020-21 and $US105 for 2021-22. NAB is forecasting the price of iron ore will slide to $US120 in the December quarter.

Driving that demand is stronger global steel markets, where hot rolled coil prices have more than tripled in the US over nine months and more than doubled in Germany and Brazil.

Largest gold producer

CommSec’s Craig James said the question now was how long it would take for higher raw commodity prices to flow through to consumer prices.

“The main lift in prices is at a producer level – such as record copper and iron ore prices. The question is how quickly and how extensive will be the pass-through from higher producer prices to higher consumer prices,” Mr James said.

Australia’s non-monetary gold exports to China increased for the first time in over a year. China is the world’s largest gold producer and consumer, typically consuming more than it produces.

ABS head of international statistics Sean Crick said the global drive to build renewable energy had also sent copper demand surging.

Copper ore recorded its third-highest export value on record at $745 million.

“Much of the increase in copper ore was price-driven. Green technology is copper-intensive, driving recent demand, with March the second month on record that Australian copper ore exports have obtained a unit value above $4.50 a kilogram,“ Mr Crick said.

Exports to Japan jumped 26 per cent to $858 million driven by metalliferous ores, up $243 million or 35 per cent.

The decline in exports to India was driven by a $188 million decline in non-monetary gold. However, coal exports to India were up $193 million.

Elsewhere in the trade data, consumer goods imports for March increased $631 million or 7 per cent to $9 billion. Consumer goods import levels give an indication of domestic consumption levels.

In March, exports of goods increased $4.6 billion or 15 per cent to $36.2 billion, while imports of goods increased $3.6 billion, also 15 per cent, to $27.8 billion.
Source: Australian Financial Review

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