Higher Iron ore and coal prices could add an estimated $12.7 billion to Australia’s export revenue in FY17. Image: Rio Tinto.
By Cameron Drummond
THE Australian Government has increased its 2016-17 export value projections for coal and iron ore due to higher commodity prices and an unexpected uptick in Chinese construction activity.
The Department of Industry, Innovation and Science’s latest Resources and Energy Quarterly report increased its FY17 outlook for both commodities, adding $12.7 billion to previous estimates.
As a result the total value of Australia’s resources and energy exports for FY17 was revised up 12 per cent from the June quarter estimate of $163 billion to $176 billion.
Its iron ore price outlook increased from $US43 per tonne to $US47/t, adding $4.7 billion in projected export revenues. This was due to an unexpected persistence in the effects of China’s housing stimulus, in addition to weather and infrastructure related supply issues.
Australia’s iron ore export earnings are forecast to increase 12 per cent to $54 billion in FY17, revised up from the previous forecast of $49 billion because of persistently high prices in the September quarter.
Four year highs to global metallurgical coal prices in the September quarter were driven by increased import demand from China and production disruptions in Australia.
The report revised its metallurgical coal price forecast from $US85/t in the June quarter to $US118/t, adding $8 billion to FY17 export earnings.
Export earnings were also forecast to increase, rising 35 per cent to about $26 billion in FY17, supported by higher prices, particularly in the first half of the financial year.