The View | ‘New normal’ in Australia commodities – low prices and strong volumes
The big picture is that Australia is receiving less money for its commodity exports, with the value dropping 11 per cent to A$174 billion (US$133.8 billion) in the 2014-15 fiscal year
"New normal" is a term coined about China’s transition to slower but hopefully more sustainable economic growth, but it can be equally applied to many commodity markets.
This reality was well illustrated by the Australian government’s latest set of forecasts for the country’s commodity exports, which highlighted we are now in an era of low prices but strong volumes.
Australia’s official forecasts carry weight because the country is the world’s largest exporter of iron ore and metallurgical coal, and will become number one in liquefied natural gas (LNG) within the next few years.
The big picture is that Australia is receiving less money for its commodity exports, with the value dropping 11 per cent to A$174 billion (US$133.8 billion) in the 2014-15 fiscal year from the same period a year earlier, the Department of Industry and Science said in its latest quarterly outlook published June 30.
However, the news isn’t all bad, with export earnings forecast to rise to $178 billion in 2015-16.
But as usual, the devil is in the detail and the only reason Australia can expect even that modest increase in commodity export earnings is because of the ramp-up of shipments of LNG.