Commodity export earnings are forecast to fall from last year’s record $467 billion to $400 billion in 2023–24, and $352 billion by 2024–25.
World demand is soft, and improved supply conditions for some commodities will also see prices retreat further from the extraordinary peaks of 2022.
The world economic slowdown, including the sluggish rebound in the Chinese economy from COVID lockdowns, will cut resource and energy export earnings from a record $467 billion in 2022–23 to $400 billion in 2023–24.
Slower growth in the Chinese residential property sector is lowering demand for steel, with flow on effects for iron ore.
The global energy transition continues to pick up pace, with global investment in clean energy is expected to reach US$1.74 trillion in 2023.
Australia is well placed to benefit from the clean energy transition, given our rich geological reserves and expertise and track record extracting these minerals.
The September 2023 Resources and energy quarterly (REQ) includes an additional chapter on the battery global value chain to complement its regular analysis on Australia’s rapidly evolving lithium sector.
Demand for electric vehicles is a growing driver of demand for commodities such as aluminium, lithium and nickel.
Australia’s thermal coal exports to China have returned to levels seen prior to informal restrictions being imposed in October 2020.
Australia was able to divert thermal coal exports away from China to India and other nations when the restrictions were imposed, but these flows have largely reversed.
However, Mongolian and Russian metallurgical coal supply to China has replaced a large amount of Australian coal.
The overall commodity outlook remains largely unchanged from the March and June editions of the REQ.
Broad factors including slower world economic growth and improving supply conditions have persisted.
Tighter monetary policy is causing a slowdown in economic growth in the major Western economies, where labour markets have been tight.
Falling energy prices will also take some of the pressure off central banks to keep tightening monetary policy.
Geopolitical tensions continue to escalate the drive to secure the supply chains of metals and low emission technologies used to meet ‘net zero’ climate ambitions.