SYDNEY: Australia’s trade surplus rose to a six-month high in December as iron ore exports to China easily weathered diplomatic squalls between the two countries, while coal shipments found new buyers beyond the world’s second-largest economy.
China’s reliance on steel-intensive infrastructure and construction to sustain economic growth means it has little choice but to keep importing Australian iron ore, even as prices for the mineral hit multi-year highs.
Data from the Australian Bureau of Statistics out on Thursday showed goods exports to China jumped 21% in December to a six-month high of A$13.3 billion, with iron ore up sharply by both value and volume.
That helped Australia’s trade surplus swell to A$6.8 billion ($5.19 billion) in December, from A$5 billion the month before, as exports rose 2.8% and imports fell 2.4%.
The surplus for the December quarter widened by 28% to A$17.4 billion, a timely positive for economic growth and tax revenue that is helping the country quickly recover from its first recession in three decades.
For all of 2020, exports climbed 12% in a resilient result given the disruptions caused by the global pandemic.
While China remains Australia’s single biggest market, exporters are finding willing buyers elsewhere for goods targeted by Beijing’s trade restrictions.
“In particular, Australian coal shut out of China is rapidly finding new homes,” said Daniel Hynes, a senior commodity strategist at ANZ.
“The complete collapse of exports to China has been more than offset by gains in exports to Japan, India, South Korea and Thailand.”
Shipments of hard coking coal jumped 28% in December, from the previous month, while thermal coal rose by a quarter.
Demand has proved so robust that prices for coking coal have risen by a quarter over the past year, while thermal coal shipped from the port of Newcastle is up nearly 60%.