Australia's Accounting for Iron Ore and Coal Exports to China has failed

Data show that Australia's import and export surplus fell slightly in April, adjusted to A$4.87 billion, below expectations of A$5.1 billion. In addition, the Australian Bureau of Statistics has revised downward the data published in the past two months. The market had previously agreed that Australia's import and export surplus would rise to A$5 billion in April, but the results were disappointing. However, the outcome is also predictable, as Australia's GDP growth in the first quarter of 2019 has fallen to its lowest level in 10 years, far below its long-term average of 3.5% year-on-year growth of 1.8%, and the poor economic import and export figures certainly fail to meet expectations. To boost the economy, the Bank of Australia announced on June 4 that it would cut its cash rate from 1.5% to 1.25%. Australia's economy is heavily dependent on its resource exports, of which iron ore is Australia's largest export commodity, and the damage to iron ore exports will inevitably affect the Australian economy. In particular, this year BHP Billiton, an Australian iron ore giant, announced a cut in production, announcing a loss of about 14 million tons in 2019. In addition, coal is also one of Australia's important export commodities. Data show that Australia's total exports of hot coal and coking coal will reach A$67 billion in 2018-19, slightly higher than the export value of iron ore of A$61 billion. However, Australia's exports of iron ore and coal to China have declined recently. In April, China imported 53.9 million tons of iron ore from Australia, down from 58.9 million tons in March. Ship tracking and port data also show that China's daily imports from the maritime market in April decreased by about 550,000 tons compared with March, of which imports from Australia dropped by one third. In the case of poor mineral exports, Australia's economy is clearly greatly affected. In response, Shane Oliver, chief economist at AMP Capital, said that Australia's 28-year record of no recession is being broken and that the risk of a recession in 2020 will be higher and the risk value has increased from 15% to about 25%.