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Highlights
- The Department of Industry, Science, Energy and Resources, forecasted resource export earnings to jump by a whopping 33% in FY21-22.
- Worldwide commodity and energy prices surged this year on prospects that Russia’s invasion of Ukraine will intensify shortages.
- The new variant of coronavirus has overtaken various parts of the world over the past few months.
The ongoing tussle between Russia and Ukraine is expected to send Australia’s annual mining and energy export earnings to AU$425 billion in 2021-22, delivering an AU$46 billion increase and driving profits even higher at exporters, including Woodside, Rio Tinto, BHP and Santos.
The Department of Industry, Science, Energy and Resources, stated in its Quarterly Resources and Energy Outlook that resource export earnings were forecasted to jump by a whopping 33% in the financial year 2021-22 ending in June, relative to the previous year, driven by a record surge in LNG and coal prices. However, these earnings are forecasted to drop to AU$370 billion in 2022-23.
Here’s how commodities have performed in the last week; click here.
Russia-Ukraine war spiked global commodity prices
Worldwide commodity and energy prices surged this year on prospects that Russia’s invasion of Ukraine would intensify shortages. Sanctions imposed by Western allies on Russia have further disrupted the global supply chain.
Source: Copyright © 2022 Kalkine Media®
Though it is too early to predict long-lasting impacts of Western sanctions on the commodity market, it looks crystal clear that world trade and investment flows will change their dynamics in line with geopolitical alliances over the outlook period.
Also Read: Nickel price surpasses US$100,000/t; ASX nickel stocks rise
China relaxing its macroeconomic policies
China, one of the leading players in the world commodity market, has relaxed its macroeconomic policies in recent months with an aim to strengthen economic growth following last year’s shutdown.
The International Monetary Fund (IMF) forecasted in January 2022 that China’s GDP growth would be 4.8% in 2022 and 5.2% in 2023, significantly lower than previous forecasts. The country has also been forced to manage renewed outbreaks of the COVID-19 pandemic in the March 2022 quarter, with recent lockdowns being imposed across various parts of the country.
Source: Copyright © 2022 Kalkine Media®
At the same time, the new variant of coronavirus has overtaken various parts of the world over the past few months. This, along with severe weather conditions, has disrupted the production and export of bulk commodities, further disturbing the global supply chain.
Good Read: Here’s why precious metals are shining amid gloom of war
Furthermore, ongoing supply disruptions have pushed inflation to record high levels in most of the leading economies, and major central banks have started tightening the monetary policy.
Bottom Line
The ongoing crisis between Russia and Ukraine has pushed global commodity prices to record high levels on rising concerns related to supply shortages. As per the Department of Industry, the resource export earnings are forecasted to jump by a whopping 33% in FY21-22.
