Australia's trade position back in black

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Australia's trade position back in black


AAP
02/10/2008 3:50pm


Surging coal exports and a fall in oil imports helped Australia's trade balance rebound in August to its second-largest surplus.

The Australian Bureau of Statistics say there was a trade surplus of $1.364 billion in August, seasonally adjusted, a turnaround of $2.06 billion from July's revised $697 million deficit.

The median forecast was for a surplus of $200 million for August.

Only when the Reserve Bank of Australia (RBA) sold two-thirds of its gold holdings for $1.8 billion in 1997 has the country posted a greater monthly trade surplus, in June of that year.

An increase in coal, coke and briquettes exports of $943 million, or 26.4 per cent, during August was the main boost for the surplus, the ABS showed.

ABN Amro chief economist Kieran Davies said price increases in the contracts for commodities boosted Australia's trade balance to post its second surplus in three months.

In June, Australia posted a trade surplus of $365 million.

"The turnaround in the trade balance is showing that the recent surge in coal and iron prices is coming through in the numbers," Mr Davies said.

"It should produce a sharp narrowing in the

current account deficit, although it will still be large because the cost of servicing our foreign debt is so big at the moment."

Overall, exports rise of 6.4 per cent in the month and gained 32.4 per cent from August 2007, the best annual rise in nearly eight years.

Imports declined 2.4 per cent in August.

Australia's net trade balance for the first two months of the 2008/9 financial year was a $531 million surplus, compared to a $3.066 billion deficit in the corresponding period in 2007/8.

Commonwealth Bank of Australia senior economist Michael Workman said net exports would support growth in Australia's gross domestic product (GDP) over the coming year.

"The surplus was a lot higher than expected: it's pretty indicative of what's coming up on the trade side over the next year," Mr Workman said.

"It looks like there's more (export) growth - possibly five to 10 per cent over the next five to six months."

However, ANZ economist Alex Joiner said the global economic downturn would put Australia's trade balance under pressure in 2009.

"At least we have entered the current period of turbulence in relatively good shape," Dr Joiner said.

Fluctuations in the price of oil, falling from its record-high of $US147 a barrel in mid-July helped fuel imports drop by $887 million, or 25 per cent in August.

This was after oil imports hiked $793 million in July.

"We are a net importer of oil nowadays so the fall in the world price of oil has helped us out," Mr Davies said.

Mr Davies said there was unlikely to be anything new ahead for the Reserve Bank of Australia's (RBA) before its monthly board meeting

next week.

"I think they (the RBA) would have always assumed that we would see this turnaround, given what's happened to coal and iron prices," he said.

Markets have nearly factored in the central bank lowering the overnight cash rate by half of a

percentage point next Tuesday.

Interesting artical

 

[mullokintyre]

From Todays OZ

Australia’s “extraordinary” trade surplus pushed above $15bn for the first time in August, as booming LNG and coal exports offset the impact of falling iron ore prices and rural sales jumped higher.

Overall export earnings lifted by $1.9bn, or 4 per cent, to $48.5bn in the month, while imports contracted by 1 per cent to $33.4bn, the seasonally adjusted figures from the Australian Bureau of Statistics showed.

That left the net balance at $15.1bn – $2.4bn larger than in July and well above the $10bn forecast by economists ahead of Tuesday’s release.
The ABS data confirmed the 44th consecutive month of surpluses, easily outstripping the previous record run of 23 months from January 1972 in data stretching back to 1971.

CBA senior economist Belinda Allen said over the past year commodities exports – both agricultural and non-agricultural – had driven surging international sales.

“The size of the trade surplus is just extraordinary in a historical context,” Ms Allen said.

There are two things to take from this.
Firstly, Australia's good fortune is driven by all things hated by progressives, mining, fossil fuels, agricultural production.
There were no green industries featured, no socially progressive production outputs, no climate change breakthroughs.
Secondly, as usual the economists and their forecasts were hopelessly wrong.
Lucky we don't rely on them to provide useful stuff like food or computer apps.
And not surprisingly, in other news, the RBA kept rates on hold.
Mick

 

[bk1]

And don't expect the national broadcaster to say anything about it, in fact, just ignore it ever happened.
They are all the same, living in an alternate world with not an objective thought in their collective heads.

 

[SyBoo]

 

[qldfrog]

View attachment 131094

View attachment 131094

Would be interested by coal position as China is doing an embargo so do we sell cheap to malaysia which resells to China for a profit?

 

[Dona Ferentes]

LNG exports (up 16 per cent month-on-month) and coal (up 13 per cent month-on-month) offset a 4 per cent fall in iron ore exports.


Winter hasn't even begun in the nthn hemisphere.

and there are vessels that have been offshore China for a year, filled with BOMB (Best Ordinary Mixed Black) coal ex-Newcastle, that are quietly being unloaded (will try and find that source !)

 

[Smurf1976]

Firstly, Australia's good fortune is driven by all things hated by progressives, mining, fossil fuels, agricultural production.
There were no green industries featured, no socially progressive production outputs, no climate change breakthroughs.

In other words resource extraction and keeping the housing bubble going with low interest rates.

Trouble is, rational discussion on the subject has become pretty much impossible due to the debate assuming a religious-like manner. It's either one extreme or the other rather than seeing things as they are.

Personally well I absolutely accept that we're heavily reliant on mining and services right now but I'd argue it's foolish to intentionally continue that. It's not the basis of a high standard of living First World economy in the long term to be so reliant on so few things especially when they're finite.

 

[mullokintyre]

Personally well I absolutely accept that we're heavily reliant on mining and services right now but I'd argue it's foolish to intentionally continue that. It's not the basis of a high standard of living First World economy in the long term to be so reliant on so few things especially when they're finite.

Which is why I am looking at arable land, food production, and sustainable agricultural activities for long term investments.
Once the minerals have gone (and they will), we will need something else relatively unique to our position.
These areas are where I reckon that substitution will occur.
Mick

 

[greggles]

Once the minerals have gone (and they will), we will need something else relatively unique to our position.

While I agree with you about agriculture, I think that we have barely scratched the surface with regards to the mineral wealth that lies beneath the surface of this continent. However, over time the price of some base metals may decline as a result of decreased demand due to factors such as metal recycling and global economic conditions.

A look at historical base metal prices shows many highs and lows and wild price swings, so we cannot rely on mining long term as the basis of our economy. It would be foolish to do so with so much price volatility. As a nation we need to diversify our economy. As a first world, educated country there are endless possibilities, especially with so much land under our control.

 

[basilio]

Which is why I am looking at arable land, food production, and sustainable agricultural activities for long term investments.
Once the minerals have gone (and they will), we will need something else relatively unique to our position.
These areas are where I reckon that substitution will occur.
Mick

How about renewable energy produced by thousands of acres of solar panels and sent by underwater cable to northern neighbours ?
Why not 15 M tons of Green Hydrogen produced from a huge surplus of renewable energy?
What about combining abundant energy and cheap hydrogen to produce no emission steel?

That is the direction that FMG is taking in response to using Australia resources more thoughtfully and addressing the critical CC issues we are all facing.

Superpower: Australia’s low carbon opportunity – Ross Garnaut

www.rossgarnaut.com.au

 

[qldfrog]

While I agree with you about agriculture, I think that we have barely scratched the surface with regards to the mineral wealth that lies beneath the surface of this continent. However, over time the price of some base metals may decline as a result of decreased demand due to factors such as metal recycling and global economic conditions.

A look at historical base metal prices shows many highs and lows and wild price swings, so we cannot rely on mining long term as the basis of our economy. It would be foolish to do so with so much price volatility. As a nation we need to diversify our economy. As a first world, educated country there are endless possibilities, especially with so much land under our control.

Mining up and low are indeed a given.
We have sun so H2 production, food and i think we have underestimated leveraging our unique flora for medical or agricultural purpose.being in the southern hemisphere and relatively developed, we should be able to discover active component, hybridisation potentials whicj have not been available in overexploited researched northern hemisphere..a pipedream?

 

[Smurf1976]

I think that we have barely scratched the surface with regards to the mineral wealth that lies beneath the surface of this continent.

No doubt more will be found.

Ultimately though relying on the extraction of a finite resource comes with a lot of downsides, it's the equivalent of being someone else's casual labour hire worker rather than being the business owner or at least a full time employee. It's selling yourself, no value added, at whatever the market pays.

If you take the ore and process it, well the product is worth far more than the ore and it creates a far broader range of economic benefits. Look at a refinery or smelter and there's a lot of complex technical stuff going on, there's a lot of people involved either as employees or via suppliers and contractors. If you take $10 worth of ore and turn it into product that's worth $50 - $200 (depends on what it is) then that's not only profit for shareholders but a lot of that additional value is being spent in the community, it's going to workers, suppliers, government and so on.

This place in Tassie is roughly a $1 billion a year industry and that's shipping in all the ore and sending out the product, nothing's being dug up on site. 99.995% pure zinc metal is worth far more than the pile of dirt it comes from.

Google Maps

Find local businesses, view maps and get driving directions in Google Maps.

www.google.com.au

 

[bk1]

Look at a refinery or smelter

-
Lets have a look then:

2000- 8 Refineries in AU
2003 to 2015 - 7 Refineries
2015 - 4 Refineries
2021- 2 Refineries ? or maybe 1.
local oil refineries have struggled to remain financially viable compared to larger facilities in the Asia-Pacific region with much greater production capacities (i.e. scale) and a fraction of Australian labour costs.

Name any value add industry and rinse and repeat.

 

[Austwide]

I think I read an article a long time ago that said Aus crude oil is now only essentially the heavier hydro-carbons and it mainly produces greases and not petrol, making processing less profitable.

 

[mullokintyre]

Another quarter, another ecord trade surplus.
From Todays OZ

Australia’s current account surplus jumped by $1bn to a historic $23.9bn in the September quarter, extending the record run of surpluses to ten as booming commodity prices continued to drive exports values higher.
With much of NSW, Victoria and the ACT in lockdown through the period, the Australian Bureau of Statistics also said the government had to borrow $52.5bn “due to spending on business support programs, Covid-19 disaster payments and accelerated roll out of vaccine programs”.
The nation has experienced a trade boom through Covid-19 health crisis and despite trade aggression from our largest economic partner, China, mostly thanks to sky-high iron ore, coal and liquefied natural gas prices.
International earnings have bolstered government coffers at a time of massive deficits as authorities have outlayed hundreds of billions in emergency support measures.
The current account surplus through the September quarter was driven by an $8.1bn increase in the trade balance, the ABS said on Tuesday.
Exports of goods and services rose $9.7bn, or by 8 per cent, while imports rose $1.6bn, or by 2 per cent, on a seasonally adjusted basis.
The net primary income deficit – the balance of capital flows, such as interest payments and dividends, in and out of the country – rose by $7.7bn to $14.3bn in the quarter.

Thats a little worrying. Despute a massive trade balance surprlus, there is still large amounts of funds goiing out of the country.
And once again, the trade surplus was driven by all the wrong sort of trade.

ABS head of international statistics Andrew Tomadini said the record current account surplus “was driven by strong prices for exports of coal and other mineral fuels as well as greater volumes of agricultural exports”.

And as fast as the parts of the economy that produce tangible things bring the money, the other arms of the government spend it all.

The separate ABS government spending data also showed the general government net operating balance dropped by $47.6bn to -$45.4bn over the September quarter, as tax revenue plunged by 17 per cent and expenses increased by 9 per cent.

Mick

 

[mullokintyre]

Todays GDP report out
From ABC News

Australia's economy shrank 1.9 per cent in the September quarter, but was still 3.9 per cent bigger than it was at the same point in 2020, after the initial COVID-19 lockdowns.

The result was much better than most economists had feared, with forecasts centring on a 2.7 per cent quarterly decline as large parts of the economy were shut in New South Wales, Victoria and the ACT for most or all of the September quarter.

And a consistent theme continues, the economic forecasters got it wrong again. I mean you can understand a slippage 10% either way, its not a perfect science, but just shy of 30% higher is s big margin of error.

Those lockdowns were reflected in a 4.8 per cent fall in household consumption spending, led by a 5.8 per cent slump in services spending centred on hospitality, recreation and culture, and transport.

The acting head of national accounts at the Australian Bureau of Statistics (ABS), Sean Crick, said non-lockdown states helped partially offset the decline in Australia's south-east.

"Household spending in NSW, Victoria and the ACT fell 8.4 per cent, compared to the other states which rose 0.7 per cent," he said.

"The fall in domestic demand was only partly offset by growth in net trade and public sector expenditure."

Lockdowns in the hands of the states are a bit like interest rate levers in the hands of the RBA.
An unwieldy over/under reaction scenario that is usually late , and prolonged longer than needed.
Mick

The September quarter slump again left Australia's economy smaller than it was prior to the COVID-19 pandemic.

"GDP in the September quarter 2021 was 0.2 per cent below the December quarter 2019 pre-pandemic level," Mr Crick said.