Chinese demand sends iron ore exports to record high
Australia’s trade spat with China isn’t being felt by iron ore exports, which hit new records in October.
Australia’s iron ore exports have surged to a record high of $10.9bn, accounting for more than a third of the country’s total international goods sales in October as Chinese demand for the steelmaking commodity continues to grow.
The latest figures from the Australian Bureau of Statistics revealed goods exports lifted by $1.8bn last month, or by 6 per cent, to $30.5bn.
ABS head of international statistics Branko Vitas said “the primary driver for the increase in exports was an $833 million (7 per cent) increase in exports of metalliferous ores, most of which was iron ore headed for our largest trading partner, China”.
Despite the sharp deterioration in relations with China, the Asian giant’s appetite for key mineral commodities has only climbed through the pandemic, cushioning the economic blow of the COVID-19 recession.
November is likely to be another strong month for our miners, with the iron ore price surging above $US130 a tonne this week and to a two-month high.
CBA commodity analyst Vivek Dhar said rising steel mill profit margins in China were driving the recent lift in the iron ore price.
“Steel margins have increased mostly because China’s steel demand has held up better than expected, but also partly because of steel production cuts in Northern China,” Mr Dhar said.
“Supply cuts are typical in China during the winter months to combat heavy pollution, but have notably been less than last year.”
Mr Dhar also said that China’s “infrastructure and manufacturing sectors have been particularly strong”, spurring demand for steel and, ultimately, iron ore.
A key gauge of manufacturing activity in China lifted to a near decade-high early last month.
The ABS data showed imports increased by a little under $2bn, or 8 per cent, to $25.7bn. That left a goods trade surplus of $4.8bn for the month, the preliminary and non seasonally-adjusted trade figures show.
“We continue to see a rise in road vehicle imports,” Mr Vitas said. “And with the release of new mobile phone models, and games and gaming consoles, increases in these products have driven imports up in October”.