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Australia's Imports from China hit record $10.6b in August, more than Japan,US, UK combined
Oct 6, 2022 – 6.21pmAustralia imported $10.6 billion worth of goods and services from China in August, the largest monthly haul from a single country on record, and more than Japan, the United States and the United Kingdom combined.
The strong result helped lift imports 4.5 per cent to $48.4 billion, which more than offset a 2.6 per cent increase in exports to $56.7 billion, leaving the trade balance slightly lower, albeit still on an $8.3 billion surplus.
“While August’s number is more than 50 per cent lower than June’s record print, the balance is still elevated historically, suggesting Australia’s current account balance will remain strong,” JPMorgan economist Jack Stinson said.
But ANZ economist Madeline Dunk said the latest trade data from the Bureau of Statistics suggested the days of record trade surpluses were over.
“Looking forward, slowing global growth is likely to temper Australia’s trade results. We’ll be watching Australia’s export portfolio closely to determine how quickly we cascade down from the peak,” Ms Dunk said.
“China’s embattled property sector continues to cast shadows over iron ore exports. But it’s better news for Australia’s LNG and thermal coal exports, with bad weather and European supply issues keeping markets tight.
“This will put upward pressure on prices.”
The value of Australia’s traditional standout export performer, iron ore, remained largely steady over the month. Coal exports instead stole the show, rising about 3 per cent, or $360 million on the back of high prices.
Other mineral fuels, which is mainly liquified natural gas, also rose about 3 per cent to $275 million.
“While most of the world is complaining about rising prices, Australian exporters are celebrating,” said CommSec chief economist Craig James.
“Demand for raw materials or commodities is strong, production is constrained and prices are rising. As a result, Australia’s trade accounts are solidly in surplus. And we are actively trading with more countries.”
Strong export values for coal and LNG drove exports to Japan to a record $10.9 billion over the month.
On the imports side of the ledger, consumption goods showed the strongest rise, up 7.1 per cent, which was driven by a $9.9 billion rise in car imports. Intermediate goods rose 6.6 per cent, led by an 11.1 per cent fuel increase.
“The breakdown of imports growth suggests that supplier backlogs may be clearing as supply chains unsnarl and the resilience of consumer demand has kept importer demand supported,” NAB economist Taylor Nugent said.
“Consumption goods imports at $12.3 billion are 40 per cent above 2019 levels, while intermediate and other merchandise goods imports at $18.1 billion are around 60 per cent above 2019 levels.
“Despite the pick-up in consumption imports, there is no sign yet that the fall in global containerised shipping costs that began in earnest in February is translating into lower freight costs for importers.”
The decision by OPEC+, the global cartel of oil exporting nations, to slash its output by 2 million barrels a day from November 2022 to December 2023 heightened fears of a global oversupply due to a global recession.
The decision to cut production is the biggest reduction since the start of the pandemic in early 2020 and will put upward pressure on the value of oil imports in the coming months.
However, only seven of the 20 OPEC+ members will have to reduce output, as most have been undershooting their quotas for some months. This means the expected fall in actual output will only be about 1 million barrels a day.
“The reason so few OPED+ members need to cut output to meet the new quota is a number of OPEC+ oil producers are struggling to reach their pre‑COVID levels because of underinvestment in oil supply and infrastructure,” said Commonwealth Bank commodities analyst Vivek Dhar.
Imports from China hit record $10.6b in August
Australia imported $10.6 billion worth of goods and services from China in August, the largest monthly haul from a single country on record.
