Metals, minerals, coal exports drive Australia to record trade surplus in March

May 7, 2020

SYDNEY - Strong commodity exports and a sharp fall in services imports supported a jump to a record trade surplus of AUD10.6 billion for Australia in March. HSBC says the closure of Australia's borders saw a larger fall in service imports than exports, boosting the trade surplus. Australia is typically a net importer of tourism services.

"We expect exports of metals, including iron ore and base metals, largely to China, to support Australia's trade growth in coming months," HSBC says.

Australia's exports rose by a very sharp 15.1% m-o-m in March, with an increase in goods exports of 21.6% m-o-m more than offsetting a sharp decline of 9.4% in services exports.

Exports of metal ores and minerals rose by 23.7%, led by strong iron ore exports, while coal exports rose by 9.6% m-o-m. Rural exports rose by 7.0% m-o-m while manufactures fell by 4.4%.

Non-monetary gold rose very sharply from a low base (up 224% m-o-m), although much of this was driven by re-processing trade as imports rose sharply too.

Imports fell by 3.6% m-o-m, led by a very large decline is services imports of 18.6% m-o-m. Capital imports fell by 3.3% m-o-m, while consumption imports (0.1% m-o-m) and intermediate imports (0.3% m-o-m) were broadly flat.

HSBC says it expects metals exports to be well-supported in coming months by continued demand, particularly from China, given an anticipated ramp-up in infrastructure investment.

"Both services exports and imports are set to continue to fall sharply, given the closed borders to people movements. However, a sharp fall in Australians travelling abroad is set to provide a strong offset for the decline in foreign nationals visiting Australia," it says.

"More Australians typically travel abroad than foreigners visit Australia. This should help mitigate some of the negative impact of rapidly-declining numbers of international tourists on the local economy.

"In addition, once the domestic economy re-opening picks up pace, domestic tourism should help fill some of the gap left by international visitors." (ATI).