Australia says resources and energy exports to grow to record in 2017-18 led by LNG and iron ore


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Australia forecast its resources and energy export earnings to grow to a record A$214 billion in 2017-18, driven by growing LNG and iron ore export volumes despite commodity prices resuming their decline in the December quarter.

“In 2018–19, prices are expected to weigh more heavily on export earnings, which are forecast to decline to $200 billion,” the Department of Industry, Innovation and Science said in its latest quarterly report.It said between 2016–17 and 2018–19, LNG is expected to add $14 billion to Australia’s export earnings, while coal and iron ore are forecast to subtract $11 billion and $10 billion, respectively.

“Growing LNG export volumes, attributed to the completion of the three remaining LNG projects currently under construction — Wheatstone, Ichthys and Prelude — will underpin growth in LNG export earnings out to 2018–19, while declining iron ore and coal prices are expected to drive the forecast decline in overall resources and energy export earnings,” the department said in the report.

According to the report, steel production cuts in China have placed downward pressure on the price of Australia’s biggest export — iron ore — in the December quarter.

“Continued moderation in Chinese steel production, coupled with increased supplies from both Australia and Brazil, are expected to weigh further on iron ore prices over the next two years. Coal prices — both thermal and metallurgical — are also forecast to weigh heavily on Australia’s export earnings in the next two years, due to rising global supply and moderating demand.

The report said the outlook for base metals prices was generally more optimistic than for iron ore and coal (although mixed across the individual commodities). Strong growth in global industrial production — particularly the manufacturing of stainless steel, vehicles and aluminium-based packaging — and infrastructure development, particularly in China, has boosted demand.



Global steel production and consumption forecast to be weighed down by the effects of slowing growth in China.

  • Robust growth in world steel production and consumption in 2017 was supported by stimulatory policies in China (aimed at maintaining firm economic growth), and growing momentum in economic activity in the rest of the world.
  • The pace of production and consumption growth is forecast to slow in 2018 and 2019, as the gradual effects of economic reforms and increasingly stringent environmental regulations in China outweigh an ongoing pick-up in growth elsewhere in the world.


Iron Ore

The value of Australia’s iron ore export earnings is forecast to decline, due to lower prices and despite higher volumes.

  • Australia’s iron ore export earnings grew by 31 per cent to $63 billion in 2016–17, but are forecast to fall to $52 billion in 2018–19, as the impact of lower prices more than offsets growth in volumes.
  • The iron ore price is forecast to decline to US$49 a tonne (FOB Australia) in 2019, due to growing low-cost supply from Australia and Brazil and moderating demand from China.
  • The outlook for the iron ore price is sensitive to the pace and magnitude of the decline in China’s steel production, which in turn, largely depends on government policy.


Metallurgical Coal

Australia’s exports of metallurgical coal are expected to ease slightly from the current strong level.

  • Metallurgical coal prices have been relatively steady in recent months, after a year of wild swings due to supply problems and strong demand.
  • Chinese demand has held up in the face of the high prices of recent months, as some steel mills bought ahead of the winter curtailment.
  • Supply is steadily recovering, and expansions are expected in 2018.
  • In 2017–18, Australian metallurgical coal exports are forecast to be 192 million tonnes, and then rise to 192.5 million tonnes in 2018–19.

Thermal Coal

Australia’s exports of thermal coal are expected to pick up marginally, supported by supply constraints elsewhere.

  • Thermal coal prices have remained at the relatively high levels reached late in the September quarter, at over US$90 per tonne.
  • Stronger world demand remains a feature of the market, as the world economic recovery consolidates.
  • Supply remains constrained, as China conducts safety inspections and industrial action impacts on Australian output.
  • In 2017–18, Australia’s exports are forecast to rise marginally from 2016–17, and see further minor gains to 203 million tonnes in 2018–19.



The value of Australia’s LNG exports is forecast to increase, driven by higher volumes and prices.

  • The value of Australia’s LNG exports is forecast to increase from $22 billion in 2016–17 to $36 billion in 2018–19, driven by higher export volumes and, to a lesser extent, higher prices.
  • The completion of the final three Australian LNG projects under construction will underpin strong growth in export volumes and bring annual export capacity to 88 million tonnes.
  • LNG contract prices — under which most Australian LNG is sold — are forecast to increase in line with oil prices. High LNG spot prices in Asia are likely to be attractive to Australian exporters in the short-term, but are expected to decline from their present level.
  • LNG is forecast to overtake metallurgical coal as Australia’s second largest resource and energy export in 2018–19.

Aluminium, bauxite and alumina

The value of Australia’s aluminium exports is forecast to increase, driven by high prices.

  • The value of Australia’s aluminium exports is forecast to increase by 19 per cent in 2017–18, to $3.8 billion, driven by high prices and stable export volumes.
  • Crackdowns on air pollution and illegal capacity in China are likely to push aluminium prices higher in 2018
    and 2019.



The value of Australia’s copper exports is forecast to increase, supported by higher volumes.

  • World prices are expected to average US$6,340 a tonne in 2018 and US$6,490 a tonne in 2019, driven by steady demand from China and global industrial production.
  • The value of Australia’s copper exports is forecast to increase from $7.5 billion in 2016–17 to $8.7 billion by 2018–19. Growth in export earnings will be supported by higher export volumes and higher copper prices.
  • Australia’s copper exports are forecast to rise from 921,000 tonnes in 2016–17 to 994,000 tonnes in
    2018–19, supported by new mines and expansion projects over 2018 and 2019.
Prashant has worked in the publishing industry for 17 years. His keen interest in commodities developed while working for organisations such as like Thomson Reuters, Wolters Kluwer & McGraw-Hill eventually brought him here. In his free time, Prashant consults with businesses in the digital space.


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