Barley, coal exports strengthen despite bitter China trade war

Australia’s soured relations with its biggest trading partner hasn’t stopped it achieving record export milestones, with strong demand for two commodities.

Australia racked up its fourth highest goods trade surplus on record in December, with exports to China surging 21 per cent despite soured relations with our biggest trading partner.

Data released on Monday shows Australia exported $9 billion worth of goods more than it imported, up from $7.4 billion in November.

The Australian Bureau of Statistics said the increase was significant and came after a spike in imports the month before Christmas.

The strong trade balance was driven by the highest ever exports of metalliferous ores – mainly iron ore – and cereals, ABS head of international statistics Katie Hutt said.

The increase in cereals was driven by wheat, up a whopping 423 per cent, and barley, up a surprisingly impressive 254 per cent given China imposed a whopping 80.5 per cent tariff on Australian barley following anti-dumping investigations in May.

Then in September, the Asian superpower suspended barley imports from Perth-based CBH Group, accusing the grain growers’ co-operative of excessive weed seeds in shipments.

CBH, which rejects the allegation, last week reported Australian malting barley had found a new home in Mexico, while Saudi Arabia had reopened as a destination for Australian feed barley after proving price competitive compared with market dominators Russia and Ukraine.

Australian malting barley is being used to make Heineken beer in Mexico. Picture: Patrick Hertzog/AFP

“Strong growing conditions in Australia’s wheatbelt and lower than average rainfall in the Black Sea growing region has driven demand for Australian wheat to record highs,” the ABS said on Monday.

Exports of another commodity at the centre of the trade stoush – hard coking or metallurgical coal – was up 38 per cent last month.

“While hard coking coal exports to China have diminished since mid-2020, increased exports to India, Japan and South Korea have offset some of the fall,” the ABS said.

Exports of Australian coal used in steelmaking increased to India, Japan and South Korea last month. Picture: Simon Bullard/The Australian

Total imports to Australia dropped by 9 per cent, with transport equipment down 74 per cent.

But road vehicle imports were 2 per cent higher.

“Carrying on the trend through the second half of this year, we continue to see a rise in road vehicle imports with December recording the highest monthly value, surpassing the previous record set in June 2018,” Ms Hutt said.

“Despite the record December, imports for the 2020 calendar year are the lowest since 2015, highlighting the pandemic’s impact on the imports of motor vehicles in early 2020.”

The health crisis slashed new car production around the globe by about 23 per cent last year, sending used car prices soaring to record highs.

Datium Insights last week said used car prices were expected to have peaked in the December quarter and on Monday reported they had indeed eased by 1 per cent over the past seven days.