Forecast of $10 billion cut a blow to state’s economic outlook
The backbone of the Queensland economy is likely to be dealt another blow with a Federal Government report forecasting a further $10 billion cut in metallurgical coal exports, while LNG prices have also been hit.
Queensland's coal and LNG exports are expected to continue booming- Photo Glencore
The Federal Government’s Energy and Resources quarterly said metallurgical coal prices, which contributes billions to the State Government in royalties, were at their lowest in four years.
“Australia’s export volumes are forecast to edge down by around 2 million tonnes in 2020–21 to 180 million tonnes due to lower global demand, before lifting in 2021–22, as world steel production recovers,’’ the report said.
“Australia’s metallurgical coal export earnings are forecast to fall sharply in 2020–21, from an estimated $35 billion in 2019–20 to $25 billion. They are then expected to stage a partial recovery to $29 billion in 2021–22, as prices and export volumes lift.’’
Australian LNG export prices had also fallen to record lows, due to the sharp decline in both oil and Asian LNG spot prices. Both spot and contract LNG prices were forecast to gradually recover from these lows over the next two years.
“The rapid expansion of Australia’s LNG capacity is coming to an end. Australia’s LNG exports reached an estimated 79 million tonnes in 2019–20, and are forecast to edge up to 80 million tonnes by 2021–22,’’ the report said.
“Australia’s LNG exports earnings are forecast to decline from an estimated $48 billion in 2019–20 to $34 billion in 2020–21, weighed down by low contract and spot prices, before edging up to $36 billion by 2021–22.’’
It said that on balance, the revision to Australia’s export earnings forecast was not an alarming amount.
“Our previous forecast was for commodity earnings to reach $299 billion in 2019–20 and then fall modestly.
“We (now) estimate Australia earns $293 billion in 2019–20, and forecast exports of about $263 billion in 2020–21 and $255 billion in 2021–22.
“To give this better context: $293 billion is still the largest resource and energy export figure in Australian history, and $263 billion is third highest. Resource and energy earnings will be almost 50 per cent higher – in real terms – than earned in 2008–09, during the GFC.
“This forecast comes with significant risks: a second outbreak of COVID-19, another surge in trade tensions, or an unexpectedly slow global recovery. But on balance, it remains likely that parts of the service sector will bear the brunt of the downturn, and commodities will once again buffer the Australian economy against external headwinds.’’
