Australia posts record trade surplus with China in May

Market: Coal, Coking coal, Metals, Natural gas
01/07/21

Australia reported a record trade surplus with China in May driven by higher iron ore export receipts, despite trade and political relations between the two countries deteriorating over the past 18 months.

China accounted for 39pc of Australia total exports of A$42.23bn ($32.77bn) in May, well above Australia's second-largest trading partner Japan that accounted for almost 10pc, according to trade data from the Australian Bureau of Statistics (ABS).

The export receipts were driven by another record for iron ore export revenues of almost 40pc of all of the country's exports in May. The iron ore export receipts were 17.5pc above the previous record of A$14.12bn in March.

China accounts for around 80pc of Australia's iron ore exports. This implies that iron ore receipts from China were about A$13.27bn or 31pc or all of Australia's export revenue in May and around 80pc of the A$16.48bn in export receipts Australia received from China in May.

The A$9.7bn trade surplus with China exceeded the previous record trade surplus with the world's largest steel producer of A$8.5bn in June 2019.

Iron ore has remained immune from the list of Australian exports, which includes thermal coal, subject to extra scrutiny from Beijing. China suspended its main economic talks with Australia in May following a move by Canberra in April to end potential infrastructure deals between the Victorian state government and Beijing.

China has few options in finding alternative iron ore suppliers to Australia, which is the world largest exporter of iron ore.

Combined export receipts from iron ore, LNG thermal and coking coal and metal ore rose to a record high of A$25.08bnin May, 10.8pc above the previous record of A$22.63bn in April, which in turn was revised down slightly from the original estimate of A$22.94bn, and above the A$18.31bn recorded in May 2020.

The Australian government's commodity forecaster Office of the Chief Economist this week forecast export receipts from energy and minerals to rise to more than A$310bn in 2020-21, up from the previous forecast of A$296bn made in March. Around 48pc of the total energy and mineral exports receipts will come from iron ore over 2020-21.

Australia's iron ore receipts in the first 10 months of the 2020-21 fiscal year to 30 June rose by 45pc to A$134.30bn from A$92.68bn in the same period a year earlier.

By Kevin Morrison

Australia export receipts (A$mn)
	Iron ore	Thermal/coking coal	Crude, products	LNG	Total metal, energy	Trade balance	Exports to China	Japan	Imports from China	Trade balance with China

May '21	16,591	3,812	737	2,687	25,108	9,681	16,479	4,087	6,782	9,697
April '21	14,025	3,470	862	2,950	22,744	8,157	14,208	4,248	6,779	7,429
May '20	9,538	3,749	287	3,449	18,309	6,626	13,601	3,611	13,601	6,307
2020-21 to 30 June	117,240	31,750	5,626	24,645	193,172	65,632	123,141	34,705	140,400	80,254
2019-20 to 30 June	83,137	47,240	7,862	41,446	194,073	62,915	122,982	45,947	136,583	73,373
Y % ±	74.0	1.7	156.8	-22.1	37.1	46.1	21.2	13.2	-50.1	53.8
M % ±	18.3	9.9	-14.5	-8.9	10.4	18.7	16.0	-3.8	0.0	30.5
YTD 2020-21 vs YTD 2019-20 % ±	41.0	-32.8	-28.4	-40.5	-0.5	4.3	0.1	-24.5	2.8	9.4
Source: ABS

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