China-Australia relations: Canberra unwilling to ‘give up ground’ as value of iron ore exports rise

The value of Australia’s iron ore exports – mainly to China – rose 14 per cent in October, although this is down to an increase in price rather than volume

Australian treasurer Josh Frydenberg said that Canberra had not budged on its position and would not be ‘giving ground’ on China’s list of 14 grievances

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China is a major destination for both Australian iron ore and coal exports. Photo: AFP

Published: 3:41pm, 3 Dec 2020Updated: 6:55am, 4 Dec 2020

The value of Australian iron ore exports to China rose again in October, but analysts expect overall trade between the two countries to wane over the coming months amid a worsening conflict.

Iron ore exports – mainly to China – rose 14 per cent in October compared to September, with the level driving a strong trade surplus overall for Australia even though coal exports fell 2 per cent, according to Thursday’s international trade update from the Australian Bureau of Statistics. In year on year terms, Australia’s iron ore exports to China rose by 35 per cent.

The risks to overall trade continue to mount. Given the headwinds to exports we still think [Australian] import growth will outpace export growth in the coming months

Ben Udy

China is a major destination for both Australian iron ore and coal exports, but the increase in the value of Australia’s iron ore exports was due to an increase in prices rather than volume, analysts said, likely reflecting the continued strong Chinese demand exceeding the global supply of the raw material. The actual volume of exports to China were more muted, analysts said.

“While exports to China increased in October, that was likely due to higher commodity prices. Coal exports fell in the month which may be a consequence of the rumoured restrictions from Chinese state-owned steel mills on Australian coal,” Capital Economics’ Australia & New Zealand economist Ben Udy said.

“The risks to overall trade continue to mount. Given the headwinds to exports we still think [Australian] import growth will outpace export growth in the coming months.”

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