‘Extraordinary’: Australia’s trade surplus surges to record $15.1bn

Booming LNG and coal exports offset the impact of falling iron ore prices as rural sales surged higher.

Monthly wheat export earnings have more than tripled over the past year. Picture: Zoe Phillips

Australia’s “extraordinary” trade surplus pushed above $15bn for the first time in August, as booming LNG and coal exports amid a worsening global energy shortage offset the impact of falling iron ore prices.

Overall export earnings lifted by $1.9bn, or 4 per cent, to $48.5bn in the month, while imports contracted by 1 per cent to $33.4bn, seasonally adjusted figures from the Australian Bureau of Statistics showed. That left the net balance at $15.1bn – $2.4bn larger than in July and well above the $10bn forecast by economists ahead of Tuesday’s release.

The ABS data confirmed the 44th consecutive month of surpluses, easily outstripping the previous record run of 23 months from January 1972 in data stretching back to 1971.

CBA senior economist Belinda Allen said over the past year commodities exports – agricultural and non-agricultural – had driven surging international sales. “The size of the trade surplus is just extraordinary in a historical context,” Ms Allen said.

Economists had expected the halving of the iron ore price from an all-time high to about $US110 a tonne would shrink the trade surplus in August. Instead, a surge in sales of LNG, coal and rural goods such as wheat and wool more than offset a 3.8 per cent drop in the nation’s largest export earner.

Strong demand for coking coal (used for steelmaking) and thermal coal amid rising prices led to a 13 per cent lift in exports, while LNG exports jumped 16 per cent.

Surging coal prices and export earnings come as Scott Morrison comes under pressure from climate activists to ban new coalmines ahead of an upcoming global climate change summit in Glasgow.

On Tuesday, Environment Minister Sussan Ley was criticised for approving the expansion of the Mangoola coalmine in the NSW Hunter Valley.

ANZ economist Hayden Dimes said: “With the global demand for energy likely to remain strong for some time, the trade surplus will likely remain very elevated for a period.”

Australian farmers are also enjoying a purple patch.

 

Cereal grain exports jumped by 17 per cent in the month to be up 255 per cent over the year, as wheat growers benefited from supply disruptions overseas and a bumper crop at home. Overall, rural goods export earnings jumped by $551m in August, or 11 per cent, with wool sales lifting by almost 60 per cent to $229m, in seasonally adjusted terms.

The incredible run of massive monthly trade surpluses underlined how little overall impact politically driven trade sanctions by our largest trading partner, China, have had on Australian export earnings.

If anything, banning Australian coal imports has backfired on the Asian giant, which is facing rocketing energy costs and has endured rolling blackouts over the past month.

Goldman Sachs chief economist Andrew Boak noted that excluding iron ore, “the value of Australia’s exports to China did decline somewhat over 2020-21 – however, this decline was broadly offset by higher exports to other countries.”

For example, Mr Boak said that a drop in coal sales to China was largely offset by gains elsewhere – including to established markets such as Japan – while a drop in the value of agricultural exports, including wine, beef and barley, was more than offset by gains to other markets.

“This pattern is consistent with reports that many exporters were able to divert produce to other markets, and broadly supports the idea that bilateral trade restrictions have little medium-term impact,” Mr Boak said.