The March 2024 Resources and Energy Quarterly (REQ) has forecast the return to long-term trends in the earnings of Australia’s resources and energy sectors on the back of softer world growth and improved supply, with the long-term outlook predicting stabilisation of prices and increased demand from India.
The Department of Industry, Science and Resources report shows that while export volumes are steady, earnings are forecast to be down by eleven per cent in 2023–24 to $417 billion from the record $466 billion in 2022–23.
Export earnings are forecast to continue to ease to $369 billion in 2024–25, before starting to level out over the rest of the outlook period as the decline in commodity prices slows.
The report reveals that forecasts are an improvement on December REQ forecasts of $408 billion in 2023–24 and $348 billion for 2024–25.
The REQ shows that while world economic growth remains soft, key markets have continued to support commodity demand.
China is expected to remain a huge influence on resource and energy commodity markets but India is expected to account for a significantly larger share of world commodity demand by 2029.
Federal Minister for Resources and Northern Australia, Madeleine King, said the five-year outlook in the March 2024 REQ showed a positive outlook for resources and energy exports which continue to support jobs, provide secure and reliable energy supplies to countries in the region and underpin Australia’s economic well-being.
“While global prices are easing, the March 2024 Resources and Energy Quarterly shows demand is likely to be sustained for commodities used in low emissions technologies, including iron ore, copper, aluminium and lithium.
“The road to net zero runs through Australia’s resources sector.
“Our resources and energy industries support more than 300,000 Australian jobs directly and indirectly, supporting regional communities and our national economy.”
The March 2024 REQ finds that despite weaker prices in recent months, iron ore exports are set to rise to $136 billion in 2023–24 from $124 billion in 2022–23, before easing back to $111 billion in 2025 and around $83 billion by 2028–29 (in real terms).
Nickel and lithium prices have been pushed to five-year lows due to surging supply and softer growth in demand. The report finds the medium-term outlook for Australian lithium and nickel exports to remain substantial.
Nickel export revenue is forecast at $3.6 billion in 2024–25 and $2.4 billion in 2025–26 compared with $5 billion in 2022–23. Lithium export revenue is forecast to drop to $11.3 billion in 2023–24 from $20.1 billion in 2022–23, despite a modest increase in export volumes.
Australian copper export earnings are forecast to reach $12.1 billion in 2023–24. Higher export volumes and rising prices are expected to see copper export earnings reach $16.8 billion (in real terms) in 2028–29.
Driven by lower LNG prices, LNG earnings are forecast to ease to $72 billion in 2024–25 from $96 billion 2022–23, before easing to $45 billion by 2028–29.
Earnings from metallurgical coal, used for steel making, are expected to be $56 billion in 2023–24, down from 2022-23 $62 billion, before easing further over the outlook period. Thermal coal earnings are forecast at $36 billion in 2023–24, down from $66 billion in 2022-23, before easing further over the outlook period.
