MNI ANALYSIS: Australia Trade Surplus Narrows As Exports Fall

--LNG Exports Up First Time in Four Months

--Main Drag From Iron Ore and Hard Coking Coal

     SYDNEY (MNI) -  - Australia's trade surplus narrowed sharply in October to

the lowest since April as exports fell and imports rose, raising worries about

prospects for a rebound in the contribution of net exports to GDP in Q4 after no

contribution in Q3.

     Data published by the Australian Bureau of Statistics Thursday showed the

trade surplus narrowed to A$105 million in October from a revised surplus of

A$1.6 billion in September. The October figure was the lowest trade surplus

since A$38 million in April and sharply lower than MNI median forecast for a

surplus of A$1.2 billion.

     The fall in the surplus was mainly due to a 3% m/m decline in exports of

metal ores and minerals. Imports rose 2% due to a 4% rise in intermediate goods

that was mainly fuel, and a 2% rise in consumption goods that was largely due to

food and beverages.

     Economists at TD Securities were the only ones to have a forecast close to

the outcome, with a prediction of A$300 million surplus and they cited a pause

in exports to China and a rebound in imports as a reason for that.

     In original terms, the main drag came from iron ore lump and fines exports,

and hard coking coal due mainly to fall in quantities. In case of iron ore lump,

quantities fell 6% and unit values fell 5%. Iron ore fines quantities fell 2%

and unit values fell by a much sharper 11%. Hard coking coal unit values rose 4%

but quantities fell 20%.

     Overall exports fell for three main commodities and rose for the other

three. Liquefied natural gas exports rose in October for the first time in four

months, rising A$378 million or 21% as quantities rose 22%. Unit values,

however, fell 1% and was down for the fourth month in a row.

     Below is table on International-trade data for October:

                                       October                         September

--------------------------------------------------------------------------------

                                       (in A$)                           (in A$)

                           Seasonally Adjusted               Seasonally Adjusted

Trade                                              +1.60 bln (revised from +1.75

Balance                               +105 mln                              bln)

               +1.2 bln (range +300 mln to 1.9

MNI Median                                bln)

Exports                              31.87 bln                         32.77 bln

Imports                              31.77 bln                         31.17 bln

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

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