The Australian Government’s Resources and Energy Quarterly has recently been released, providing data on the performance of Australia’s resources and energy sectors and analysis of key commodity markets.
According to Mark Cully, Chief Economist Department of Industry and Science, the release contains an update to the Office of the Chief Economist’s short-term commodity forecasts and overviews of key commodity market issues.
Global commodity prices are clearly in a downturn and many of the factors that supported the ‘supercycle’ that commenced in the 21st century have now reversed, said Mr Cully. Strong resources sector investment has resulted in a surplus of both mining and refining capacity, consumption growth has moderated to lower levels and the US monetary policies that affected US dollar dominated prices are starting to shift.
Australia’s domestic production of key commodities is continuing to expand in this environment of lower prices. The widespread fall in commodity prices through 2014 and early 2015 have led producers to shift focus from production expansion to managing costs and productivity.
As a result exploration expenditure, employment and capital spending are all down in Australia. In the short term, market conditions are likely to be challenging for many producers. However, in the longer term the continued rise of highly populated emerging economies will continue to drive growth in consumption of both mineral and energy resources.
APPEA has welcomed the publication, stating that it reveals Australia to be on track to become the world’s largest producer of liquefied natural gas (LNG).
“We are witnessing an historic milestone for natural gas delivery as higher energy export earnings reflect the move of Australian LNG projects from construction to operation,” APPEA Chief Executive, Malcolm Roberts said.
“Further projects due for completion in Queensland and Western Australia over the next year will continue to underpin further growth and deliver significant royalty revenue for public services.”
According to the report Australia exported $4.6 billion worth of LNG in the March quarter, slightly below the December quarter as lower oil prices offset higher volumes, said APPEA.
Exports are estimated to reach $18.0 billion in 2014-15 and $24.4 billion in 2015-16 due to strong volume growth and modest currency depreciation effects.