Australia has posted an unexpected trade deficit in April as lower prices for coal and iron ore caused exports to fall by the greatest amount since July 1997.
According to the Australian Bureau of Statistics, the country posted a $91 billion deficit compared to the $2.3 billion surplus recorded in March.
Shipments of non-rural goods, including metals and minerals, fell 12% from March.
Last week, Rio Tinto agreed to a 33% cut in iron ore contract prices with steel mills in Japan and South Korea.
China Iron & Steel Association rejected the annual contract price cuts, leaving industry analysts to speculate the Chinese steelmaker is holding out for a price cut around 45%.
Annual coking coal contract prices fell 57% to about $129 a ton this year as global demand for the steelmaking raw material slumped.
“The export sector is facing lower commodity prices and weak global demand,” TSD Securities’ senior strategist Annette Beacher said.
“We believe there’s more pain to come, reversing the optimism of yesterday’s upbeat gross domestic product outcome.”
Australia’s GDP grew 0.4 percent last quarter from the previous three months as interest-rate cuts and fiscal stimulus helped the nation defy a worldwide slump that sent Japan, Europe and the U.S. into recession, the government reported yesterday.