Better than expected world economic growth will be the driving force behind an increase in Australia's commodity exports for 2000/01, according to the Australian Bureau of Agricultural and Resource Economics (ABARE) in its June issue of Australian Commodities. In 1999-2000, ABARE expects commodity exports to reach a record $70.6 billion, over 9% up on last year's figure of $64.7 billion.
ABARE’s executive director, Dr Brian Fisher, said “reflecting an improved outlook for world economic growth, Australia’s commodity exports are forecast to increase by 5.3% to $74.3 billion in 2000-01. World economic growth is assumed to average 4.0% in 2000 and 3.9% in 2001, markedly higher than the estimated 3.2% in 1999”, Dr Fisher added.
Fisher said strong economic growth in the United States was predicted to ease but would be offset by improved economic performance in Western Europe and, to a lesser extent, in Japan. The $A is expected to remain relatively weak against the US$ in the short term but as the US economy slowed and Australia's account deficit improved later in 2000-01, the $A would firm. ABARE predicts the dollar to average US63 cents over 2000-01 and on a trade-weighted basis the $A should average 55.
Energy commodities export earnings are forecast to fall from an estimated $18.4 billion in 1999-2000 to $17.9 billion in 2000-01 because of expected lower world prices. Energy prices are forecast to fall 7% after rising 14% this year.
The volume of Australian coal exports will rise by 4.6% in 2000-01, with the value of coal exports to increase by 1%, to $8.3 billion in 2000-01. Prices will be constrained by further growth in supply, particularly from low cost Indonesian suppliers. Indonesia is expected to experience the strongest growth in thermal coal exports.
Once several new power stations are commissioned, world thermal coal imports are expected to increase by 4% in 2000 and 6% in 2001. Australian thermal coal exports are forecast to recover in 2000-01 to around the 1998-99 level of more than 84 Mt after falling below 78 Mt in 1999-00.
World imports of metallurgical coal are forecast to increase by only 2.4% in 2001, reflecting slow growth in blast furnace steel production. Prices will however remain firm in 2001.
"The increase in supply from new mines in Australia has been offset by a large scale withdrawal of higher cost export supply from North America, with US exports down a third over the previous two years," ABARE said.
Australian mine production is forecast to increase 2.2% in 2000/01 after rising 12% in 1999/2000, but little funding support for new capacity is expected. The Donaldson open-cut mine is the only export thermal coal mine expected to be commissioned this year.
