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Australia trade surplus walloped by bad weather

Published 08/06/2017, 12:41 pm
Updated 08/06/2017, 12:50 pm
© Reuters.  Australia trade surplus walloped by bad weather
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By Wayne Cole

SYDNEY, June 8 (Reuters) - Australia's trade surplus collapsed in April as damage wreaked by a massive cyclone in Queensland almost halved exports of coal, underlining the risk of another round of disappointing economic growth.

The blow comes just a day after data showed the economy grew at the slowest annual pace since 2009 in the March quarter, again due in large part to the vagaries of the weather.

"This is a poor start to the June quarter," said Andrew Hanlan, a senior economist at Westpac, though he did hold out hopes for a better September quarter as shipments resumed.

Thursday's figures from the Australian Bureau of Statistics showed the trade surplus shrank 82 percent to just A$555 million ($417.69 million). That was the lowest in six months and far under forecasts of A$1.9 billion.

Exports of coal alone fell 45 percent, or a sizable A$2.5 billion, as Cyclone Debbie tore up rail tracks and caused weeks of disruption in the country's biggest coal region.

Total exports slumped 8.3 percent, the largest decline since a similar weather-affected dive in early 2012, while imports dipped just 1 percent.

Prices for some major commodities, notably iron ore, have also fallen back sharply from last year's peaks amid concerns about demand for the world's number one buyer, China.

Yet not all is dark. While coal exports were disrupted in April the mineral was still being stockpiled and would therefore add to inventories, and GDP.

Miners also worked overtime to resume shipping once the rail lines were fixed, noted Paul Dales, chief economist at Capital Economics. After diving 60 percent in March, shipments from Queensland's three main coal ports jumped 130 percent in May.

"The hit to coal exports caused by Cyclone Debbie almost single-handedly wiped out the trade surplus in April," said Dales. "However, the railways all reopened in mid-April and it's been business as usual since."

Shipments of iron ore, the country's single biggest earner, have also picked up markedly in the last couple of months.

Exports to China from Port Hedland, the world's largest ore terminal, surged to a record 38 million tonnes in May, up 9 percent on April and 21 percent on March.

Shipments of liquefied natural gas are also ramping up significantly as new projects come on line.

Analysts at National Australia Bank predict the value of LNG exports will pass A$27 billion this year and near A$35 billion in 2018, overtaking coal as the second biggest earner.

The gas could add a whole percentage point to GDP growth over this year, a much-needed offset to softness in household consumption.

($1 = 1.3287 Australian dollars)

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