Australia, the world's largest shipper of coal, iron ore and wool, may earn 12 percent more from commodity exports than forecast in March because of higher prices driven by China's demand for minerals and energy.
Sales may rise to a record A$212 billion ($203 billion) in the year ending June 30, 2009, the Canberra-based Australian Bureau of Agricultural and Resource Economics said today in an e- mailed statement. That compares with its March forecast of A$189 billion and estimated 2008 sales of A$151 billion.
Economic growth in China will remain robust, maintaining demand for crude oil and steelmaking materials, the bureau said. Prices for coking and thermal coals, iron ore and crude oil have all risen to records this year, bolstering profits for producers including BHP Billiton Ltd. and Rio Tinto Group.
``The consistent story here is that producers haven't been able to match the ever-growing demand from China,'' said Gerard Burg, energy and minerals economist with National Australia Bank Ltd. ``China's demand is still going and still very strong.''
China needs more resources to build homes, offices and factories. Economic growth in China, the world's fourth-largest economy, is forecast at 10 percent in 2008, before easing to 9.5 percent in 2009, the bureau said in a report on its Web site.
``The strength of Australia's minerals and energy exports continues to underpin commodity sector performance,'' the bureau's Karen Schneider, acting executive director, said in the statement. ``The price outlook across minerals and energy commodities remains positive, reflecting continued strong demand and only modest world supply growth.''
Global commodity prices are likely to remain at an ``elevated level'' amid ongoing demand from Asia, the Reserve Bank of Australia said last week. Today's report supports the central bank's forecast that the nation's terms of trade, a measure of income from overseas sales, will surge 20 percent this year. Trade will ``add substantially to national income and ability to spend,'' Governor Glenn Stevens said on June 3.
Australia's exports of minerals and energy are forecast to be A$178 billion in fiscal 2009, up from A$121 billion a year earlier, the bureau said. Woodside Petroleum Ltd., Rio, BHP and competitors are developing a record A$70.5 billion of projects, the bureau said last month. The volume of iron ore exports is forecast to 18 percent while coking coal will gain 7 percent, the bureau said.
``There has been a lot of investment in the mining sector, and that will be driving part of that export improvement,'' said Stephen Roberts, director of research at Lehman Brothers Holdings Inc. in Sydney. Today's revised forecast is ``partly because of price increases, but also gains in volumes,'' he said.
Still, Roberts said the trade boom may not offset slower spending by households and businesses, which account for more than 60 percent of gross domestic product, amid the highest interest rates in 12 years. Australia's economic growth may slow to 2.75 percent in fiscal 2009, from 3.5 percent in fiscal 2008, the bureau said.
Rio, the world's third-largest mining company, may secure a record increase of more than 95 percent price for iron ore shipped to Asian steel mills, according to Macquarie Group Ltd. Annual contract prices for thermal coal, used by power stations, more than doubled to $125 a metric ton for the year from April 1, and coking coal used in steelmaking, tripled to $300 a ton.
``The markets for the big bulk commodities, iron ore and coal, still look particularly strong,'' National Australia's Burg said by phone from Melbourne.
The price of West Texas Intermediate crude oil may average $122 a barrel in 2008, up from an earlier estimate of $86 a barrel, the bureau said. Crude reached a record $139.89 on June 16.
The bureau forecast the Australian dollar would average 90 cents against its U.S. counterpart in fiscal 2009, up from a previous estimate of 83 cents. Rural export earnings are forecast to rise to A$34 billion, the forecaster said.
Source: Bloomberg
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