Mining and energy sector exports are forecast to rise by just 2.6 per cent in 2014-15, with weakness in coking coal and iron ore prices offsetting strong growth in export volumes for most commodities.
Mining and energy sector exports are forecast to rise by just 2.6 per cent in 2014-15, with weakness in coking coal and iron ore prices offsetting strong growth in export volumes for most commodities.
The Bureau of Resources and Energy Economics said it expects sector export earnings to rise by 2.6 per cent to a record $201 billion next financial year.
That follows an estimated 11 per cent surge in export values this financial year.
BREE expects iron ore prices to ease 7.6 per cent in 2015 to average $US96.50 a tonne.
In its March quarter report, BREE had expected prices to average $US103 a tonne in 2015 but has adjusted its forecasts in response to market weakness.
“While the iron ore price is expected to rebound later in 2014 as port stock levels in China ease and steel demand picks up again, the abundance of supply that has come online will limit the prospects of iron ore prices rebounding to the high levels of 2013,” BREE said.
“In 2015, iron ore prices are forecast to decrease further. Although steel production in China is forecast to increase in 2015, increasing competition among iron ore exporters to sell their additional production is expected to intensify and push prices lower.”
The price weakness will be offset by a 12.3 per cent lift in Australian iron ore exports to 764 million tonnes in calendar 2015.
The vast bulk of this will be from the three big producers in the Pilbara – Rio Tinto, BHP Billiton and Fortescue Metals Group.
The Australian growth compares with a projected 6.9 per cent lift in Brazilian iron ore exports to 386mt.
In a research note, CommSec chief economist Crag James said the resources sector was expected to face some headwinds over the coming year, namely softer commodity prices and a firm Aussie dollar.
“But despite the resistance, export earnings are still tipped to hit new record highs,” he said.
“While iron ore dominates resource exports, the good news is that earnings from LNG, oil and base metals are expected to rise in the coming year, pushing overall export returns to new highs.
“Australian mining and energy companies will have to stay focused on reducing costs and improving efficiency and productivity in an environment of softer prices and a relatively high Aussie dollar.”
BREE estimates the value of iron ore exports will lift 3.1 per cent to $76.4 billion in 2014-15.
Liquefied Natural Gas export volumes are tipped to rise by 13.5 per cent with export values up 17.3 per cent to $18.9 billion.
LNG will lift to become the third most valuable resource export in 2014-15, ahead of thermal coal and oil.
Oil exports are tipped to rise by 12.6 per cent in 2014-15 to $15.3 billion.
Coking coal prices are tipped to fall by 1 per cent to $US121.30 a tonne in 2015 after falling by 24.5 per cent in 2013 and by 22.7 per cent in 2014.
Coking coal production is tipped to rise by 2.8 per cent to 184.4mt in calendar year 2015 with export values tipped to fall by 9.2 per cent to $20.8 billion.
