REPEAT: Australia Q2 Export Prices Fall on Iron Ore, Coal

Repeats Story Initially Transmitted at 01:58 GMT Jul 27/21:58 EST Jul 26

--Terms of Trade Expected to Decline in Q2

By Sophia Rodrigues

     SYDNEY (MNI) - International trade price indexes for the second quarter

released by the Australian Bureau of Statistics on Thursday.

                      Import Price Index  Export Price Index

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

                                % Change            % Change

                                      Q2                  Q2

Quarter-over-quarter                -0.1                -5.7

MNI median                          +0.6                -5.5

Year-over-year                      +0.3               +22.5

     FACTORS: The export price index fell in the second quarter -- the first

fall in five quarters -- owing mainly to a 14.6% q/q drop in metalliferous ores

and metal scrap that was largely due to a fall in iron ore prices. A 7.7% q/q

decline in the price for coal also contributed to the decline, along with a 4.4%

fall in petroleum and related materials. On a y/y basis, the export price index

was up 22.5%, slowing from the 31.7% rise in Q1 which was revised up due to

upward revisions in Q4 and Q3 export prices. 

     The import price index fell for the first time in three quarters, mainly

due to a 3.6% q/q drop in telecommunications prices, a 1.9% decline in

electrical machinery and a 4.6% drop in petroleum and related materials. These

declines were offset to a large extent by a 0.3% rise in prices of road

vehicles, one of the largest contributors to the import price index. On a y/y

basis, the import price index rose 0.3%, the first rise in six quarters.

     TAKEAWAY: The export price outcome were close to MNI median forecast and

points to the first fall in terms of trade in five quarters. It is also in line

with the Reserve Bank's forecast in May, where it said that "notwithstanding

recent developments, commodity prices increased over 2016 and early 2017,

resulting in a sizeable rise in Australia's terms of trade, but are expected to

decline over the forecast period."

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