Iron ore a gold mine in record trade surplus

STRONG iron ore exports and prices and a weaker Australian dollar have pushed Australia’s trade surplus to a record $5.75 billion.

The national surplus hit the new record in May, rising 19 per cent in seasonally adjusted terms from $4.8 billion in the prior month and handily beating the $5.25 billion economists had tipped. The surprisingly strong rise, confirmed in numbers released by the Australian Bureau of Statistics yesterday, could put a budget surplus within reach a year early, economists say.

Seasonally adjusted exports were up 4 per cent for May to $41.6 billion. Imports increased 1 per cent to $35.8 billion.

The major reason for the $925 million increase in the trade surplus was iron ore, with the value of metal ore and minerals exports jumping by 13 per cent to $11 billion.

Iron ore exports to mainland China rose by $1 billion, while iron ore exports to Japan were up by $222 million.

While iron ore prices have spiked this year, the data indicated increased volume was far more of a factor in May.

Lump iron ore exports were up by $455 million, with quantities up 19 per cent and unit values up 2 per cent. Iron ore fines were up $822 million, with quantities up 11 per cent and unit values up 4 per cent.

Exports of hard coking coal — the kind used in steelmaking — were up $477 million, with quantities up 25 per cent and unit values down 3 per cent. China accounted for $262 million of that rise, or 58 per cent, with exports to Belgium, India and the Netherlands up by between $133 million and $117 million.

Exports of thermal coal were down by $29 million, with increased exports to South Korea failing to outweigh a drop in exports to Japan.

Westpac analyst Andrew Hanlan noted the increased exports would boost mining profits and in turn tax revenue.