April export figures show $4.4bn drop

Australia’s exports retreated from the record highs of March, although demand for our natural resources remained strong.

Chinese demand for iron ore jumped last month as the country reopened its economy following the February shutdown. Picture: Getty

Australia’s international goods exports in April retreated from the record highs of the previous month, although demand for our natural resources remained strong.

Merchandise exports fell by $4.4bn to $31.4bn, or by 12 per cent, versus the previous month, preliminary trade data for April from the Australian Bureau of Statistics showed.

Year-on-year, exports increased $301m (or 1 per cent) when compared to April 2019.

Driving the drop in exports in April was a $2.3bn, or 8 per cent, drop in non-rural goods exports, including “significant” falls in iron ore exports – down $456 million, or 4 per cent – and coal, which dropped 8 per cent, or $412 million.

Chinese demand for iron ore jumped last month as the country reopened its economy following the February shutdown.

Petroleum exports also dropped by close to a third to $292 million.

A large, 47 per cent drop in the sale of non-monetary gold, equivalent to a fall of $1.7bn, also contributed to the overall drop in international merchandise sales. Gold exports tend to be volatile on a month-to-month basis.

“Despite the month-on-month fall in exports, Australian exports remain strong due largely to ongoing demand for Australian resource commodities, in particular iron ore from major trading partners across Asia, and gas,” the ABS said.

The iron ore price has surged 15 per cent over the past month to $US96.85 a tonne, even as concerns have been raised over China placing further imposts on Australian exports amid a political fallout from Australia’s role in calling for an independent inquiry in to the origins of the COVID-19 pandemic.

Concerns that iron ore exporter Brazil will need to shut down more of its economy and potentially its mines as the health crisis worsens there, while CBA analyst Vivek Dhar said “the front-loading of China’s infrastructure spending helps explain the resiliency of iron ore prices this year”.

Iron ore is particularly exposed to China’s policy support measures given that the huge Asian economy accounts for around 70 per cent of the world’s iron ore imports, Mr Dhar said.

A recent tour of China by UBS analysts found “bullish” feedback on the potential trajectory for the steelmaking commodity, with one trader expecting prices to lift to $US110 in the “near term”.

The ABS figures also showed the value of goods imported fell $1b or 5 per cent to $23.1bn.

“However, imports from China increased after decreases were observed in early 2020,” the ABS said.

Year-on-year, imports in April 2020 were $1.8bn, or 7 per cent, below the same month in 2019. The decrease was “predominantly due to decreases in imports of petroleum and road vehicles,” the ABS said.