Australia Cuts Commodity Export Earnings Outlook as Prices Drop

Australia, the largest iron ore shipper, lowered its forecast for earnings from the export of minerals and energy resources after prices tumbled.

The value of exports may total A$197 billion ($182 billion) in the year starting July 1, the Bureau of Resources and Energy Economics said in a report today. That compares with A$205 billion forecast in March. Earnings are set to total A$177 billion in the year ending June 30, less than the A$186 billion previously estimated, and the first decline since 2009-2010, the Canberra-based bureau said.

Iron ore has tumbled 21 percent this year and slipped into a bear market last month amid concerns slowing economic growth in China, the world’s biggest metals consumer, will reduce demand. Goldman Sachs Group Inc. and China International Capital Corp. this week joined banks from Barclays Plc to HSBC Holdings Plc in paring 2013 growth projections for China to 7.4 percent, below the government’s 7.5 percent goal.

“Large fluctuations in equity and foreign exchange markets, coupled with weakening sentiment have negatively affected the price of some resource commodities, particularly precious and base metals,” Quentin Grafton, the bureau’s executive director, said in a separate statement. An assumed depreciation of the Australian dollar in 2013–2014 will provide support for Australian dollar-denominated resource and energy exports, he said.

Coal at Newcastle has dropped 10 percent in 2013, extending a 19 percent slump last year, the most since 2005, according to IHS McCloskey, a Petersfield, England-based data provider. Gold’s 24 percent slump this year, the biggest since a 33 percent plunge in 1981, comes after 12 years of gains.

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