Australia’s bulging trade surpluses are holding up despite the bursting of a price bubble in iron ore — the nation’s largest export — as energy shortages helped send coal prices soaring and boosted the value of shipments of the fossil fuel.
Australia’s trade surplus came in at A$11.2 billion ($8 billion) in October, even as iron-ore export values plunged 23% from a month earlier and were down almost 40% from a peak in July. Coal export values jumped 14% from September, Thursday’s figures showed.
Coal Comfort
Coal's rebound is helping keep Australian exports above historic averages
Sources: ABS
The result underscores Australia’s struggle to abandon the dirtiest fuel as part of efforts to reduce carbon emissions. That’s been reinforced as nations from Europe to Asia ramp up production of coal and other fossil fuels to navigate a global squeeze on energy supply.
BHP Group’s exit from thermal coal is also looking less certain as record prices and shifting investor attitudes put the brakes on its planned retreat. Benchmark prices for thermal coal exported from Australia spiked to a record in October, though they later pulled back as China rolls out measures to ease a supply crunch that’s contributed to power shortages.
Australia’s thermal and metallurgical coal exports surged 46% in the three months through October from the prior three-month period, according to government data. Meanwhile, the price of iron ore has tumbled from a peak of more than $200 a ton to around half that level as environmental curbs in China and ongoing problems in its property sector cut demand.
“These figures confirm again the resources sector as a long-standing and major contributor to Australia’s economy with coal and gas the star performers,” Australia’s Resources Minister Keith Pitt said after the release of the trade data. “The sector is performing even better than it was before the Covid pandemic.”
Read more on Australia’s economy:
—Michael Heath in Sydney
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Charted Territory
Speaking of Shortages
The Fed’s mentions of the word ‘shortage’ in the Beige Book edge down
Source: Federal Reserve’s Beige Book, Bloomberg calculations
The Federal Reserve’s mentions of the word “shortages” in its Beige Book edged lower for a second straight report. On Wednesday the central bank said U.S. economy grew at a modest to moderate pace through mid-November amid widespread price hikes, supply-chain disruptions and labor shortages. “High freight volumes continued to strain distribution systems,” the report said, and “contacts expected that demand in the coming months would continue to be stronger than the sector’s ability to meet it.” In particular, air cargo carriers reported higher demand as “the cost of container shipping exceeded air freight rates, in some cases.”
Today’s Must Reads
- Proclaiming progress | President Joe Biden said his administration’s work has begun to alleviate supply-chain disruptions and that higher inflation is a “natural byproduct” of the global economy’s recovery from the pandemic.
- Teenage truckers | Dezjion Henson has wanted to be a truck driver his whole life. When he turned 18 last year he jumped at the chance and signed on as an apprentice with Total Transportation of Mississippi, allowed to do so by the new U.S. infrastructure law.
- Weaker outlook | Apple has told its component suppliers that demand for the iPhone 13 lineup has weakened, people familiar with the matter said, signaling that some consumers have decided against trying to get the hard-to-find item.
- Good times | Maersk is giving $1,000 to each of its roughly 80,000 employees as the world’s largest shipping company heads for record profits this year.
- New normal | The record volume of cargo moving through the U.S.’s busiest port complex is likely to continue amid high consumer demand for goods, the head of the Port of Long Beach said.
- Hold out hope | The European Union hailed the granting of a new batch of fishing licenses in a post-Brexit dispute that has poisoned Anglo-French relations, saying it sees a shared willingness to work toward an agreement later this month.
- Stephanomics podcast | On this week’s episode, host Stephanie Flanders delves into the messaging around inflation and Geneva-based reporter Bryce Baschuk shares how the debate over intellectual property rights for Covid-19 vaccines is a chance for the World Trade Organization to become relevant again.
On the Bloomberg Terminal
- Hike risk | Inflation in South Korea jumped again — this time unexpectedly — with a recovery in demand adding to supply-side price pressures from higher oil and food prices. That significantly raises the risk of another rate increase by the Bank of Korea in the first quarter of 2022, Bloomberg Economics says.
- U.S. factories | The November ISM manufacturing survey showed early signs that supply-chain snags and price pressures were taking a turn for the better. The omicron variant risks disrupting that pattern if workers reconsider returns to the labor force and a virus resurgence snarls global trade, Bloomberg Economics says.
- Use the AHOY function to track global commodities trade flows.
- Click HERE for automated stories about supply chains.
- See BNEF for BloombergNEF’s analysis of clean energy, advanced transport, digital industry, innovative materials, and commodities.
- Click VRUS on the terminal for news and data on the coronavirus and here for maps and charts.
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Supply Chain Latest: Coal Exports Fuel Australia's Trade Surplus - Bloomberg
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