SYDNEY (Reuters) – Australia’s trade surplus rebounded sharply in May as coal shipments recovered faster than expected from cyclone-induced disruptions, putting exports back on track to add to economic growth in the quarter.
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Combined with recent upbeat reports on consumer and business spending, economic growth now looks likely to have picked up from the March quarter’s disappointing 0.3 percent pace.
Yesterday’s figures from the Australian Bureau of Statistics showed the trade surplus surged to A$2.47 billion ($1.88 billion) in May, up from a downwardly revised A$90 million in April and more than twice market forecasts of A$1.1 billion.
Exports of coal alone jumped 62 percent to a cool A$5 billion as mines rushed to resume shipments after Cyclone Debbie tore up rail tracks in Queensland, one of the world’s biggest coal-exporting regions.
Total exports climbed 8.5 percent to more than recover April’s slump, while imports edged up just 0.7 percent.
Crucially for growth, export volumes were strong across the board with hard coking coal up 180 percent, semi-soft coal 58 percent and iron ore fines five percent.
That suggests net exports made a welcome contribution to gross domestic product (GDP) in the June quarter, having been the biggest single drag on growth early in the year.
Shipments of liquefied natural gas (LNG) are also ramping up significantly as new projects come on line, with export volumes up a huge 29 percent in May.
Analysts at National Australia Bank predict the value of LNG exports will pass A$27 billion this year and near A$35 billion in 2018, overtaking coal as the second biggest earner.
Australia has been on track to overtake Qatar as the world’s largest LNG exporter, but just this week the Gulf state announced plans to expand its output by 30 percent. The West’s three biggest energy corporations have expressed interest in helping Qatar with its ambition to produce 100 million tonnes of LNG annually – equivalent to a third of current global supplies – in the next five to seven years.
Australian output is forecast to reach 85 million tonnes in the next one to two years.
Qatar’s plans may not be a threat to Australia in the near term given the vast bulk of its LNG has already been sold on long-term contracts.