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Feature Article - Major commodities traded by Australia, (1991 to 2000)
Over the decade, the value of merchandise exports increased 106%. The increase in the volume of exports, after adjustment for price increases, was 89%. Three SITC Sections were the principal contributors to total exports over the decade: Food and live animals (SITC 0), Crude materials, inedible, except fuels (SITC 2) and Mineral fuels, lubricants and related materials (SITC 3).
During the decade, the contributions of Food and live animals (SITC 0) to total Australian exports grew, then fell, and Crude materials, inedible, except fuels (SITC 2) fell, while the contributions of all other SITC Sections rose, particularly for Machinery and transport equipment (SITC 7). The growth in value of Beverages and tobacco (SITC 1) of 430% is noteworthy, followed by exports of Chemicals and related products, nes (SITC 5), which increased 207%.
MAJOR EXPORT COMMODITIES
Table 2 shows for nine major 3 digit SITC Group export commodities, the value of their exports and share of Australia's export trade, at the beginning and end of the decade.
Australia's exports throughout the decade were dominated by farm and mine. Wheat, petroleum and aluminium increased their relative shares over the period, while there were decreases in the relative shares for all other major commodities. In total, the contribution of the nine major commodities to total exports declined from 50.2% to 43.0%, indicating a small broadening of the export base over the decade i.e. less reliance on these major commodities.
Exports of Meat of bovine animals (SITC 011), predominantly beef, dropped from 1993 to 1996 by 35% to $2,069 million. This decrease reflected growing competition from the USA, leading to lower prices for Australia's exports, as well as an appreciating Australian dollar. In the past four years the level of exports has improved. The reduction in US cow slaughterings and increased US prices of manufactured beef led to a greater demand for Australian beef from Japan and the USA, our major beef export markets. The weaker Australian dollar also contributed to the rise in the value of exports in the last year.
Exports of Wheat (SITC 041) fell 23% from 1994 to $1,765 million in 1995, due to drought conditions in eastern Australia. Wheat exports improved markedly after 1995 due to good Australian seasons and crop failures in the Northern Hemisphere late that year.
Exports of Wool (SITC 268) fluctuated in value during the six years to 1997 before declining sharply. Wool markets in recent years have seen an excess of production over consumption, steadily declining world prices and strong competition between natural and synthetic fibres. Australia's wool exports increased 34% to $3,291 million in 2000, as a result of significant rises in prices during 2000.
Over the decade, the contribution of wool exports to Australia's total exports fell significantly, from 6.4% in 1991 to 3.0% in 2000. From September 1999, some data for wool exports are excluded from SITC 268, due to confidentiality restrictions. However the impact of this on the data presented is minimal.
IRON ORE AND COAL
Global demand from the steel industry directly affects Australia's exports of Iron ore (SITC 281) and Coal (SITC 321). Both commodities show troughs in 1994 and 1999 when the steel industry was depressed. Japan's financial recession was an additional adverse influence in 1999. Exports of iron ore and coal increase as the global steel market improves.
Over the decade, the contribution of iron ore exports to Australia's total exports decreased, from 5.4% in 1991 to 4.0% in 2000. Coal exports contributed between 12.3% and 12.6% of Australia's total exports from 1991 to 1993, before decreasing to 10.3% in 1994 and 8.5% in 2000.
ALUMINA AND ALUMINIUM
Aluminium ores, concentrates and oxides (SITC 285) comprises two commodities at the more detailed SITC 5 digit level. They are Aluminium ores and concentrates (SITC 28510) and Alumina (aluminium oxides) (SITC 28520). SITC 28510 is affected by a confidentiality restriction for the entire period and is excluded from the data analysis.
Exports of Alumina (SITC 28520) declined from 4.5% of total exports in 1991 to 3.2% in 1999, before recovering to 3.7% in 2000. The steep increase in the value of alumina exports in 2000 was due to a tightening in the balance of supply and demand, in addition to the lower value of the Australian dollar.
In addition to being the world's largest exporter of alumina, Australia is also a major producer and exporter of Aluminium (SITC 684). The value of Australia's aluminium exports grew steadily for most of the decade.
In 1995, the value increased sharply to $2,836 million, while the quantity exported remained steady, resulting in the highest average unit value recorded over the decade of $2.65 per kilogram. The increase resulted from strengthening demand, a fall in stocks and reduced production of aluminium. The steady increase since 1996 can be largely attributed to strengthening demand, especially in Asia.
The value of Australia's exports of Crude petroleum (SITC 333) are significantly affected by movements in the international price for crude oil. Export prices were at their lowest in 1994 (an average unit value of $0.14 per litre) and at their highest in 2000 (an average unit value of $0.31 per litre). The very sharp rise in the value of exports in 2000 was due to a substantial rise in international oil prices, brought about by a tight supply demand situation, as well as some new Australian production and the weaker Australian dollar at the time.
Japan, the USA and Taiwan have been the major markets for Australia's exports over the decade. A more detailed analysis of Australia's exports and imports of crude petroleum was included in a feature article in the March quarter 2000 issue of International Merchandise Trade, Australia (Cat. no. 5422.0).
The most substantial movement in exports of Non-monetary gold (SITC 971) occurred when the value of exports increased from $4,924 million in 1997 to $7,642 million in 1998, before dropping back to $4,808 million in 1999. During 1998 export values were boosted by large sales of non-monetary gold to Europe and the USA. Note that imports of non-monetary gold were higher at that time too and that only a proportion of exports are from domestic mining.
Table 3 shows the value of Australia's imports for each calendar year of the decade, classified by SITC Section, and the proportion each contributed to the total value of imports.
Over the decade, the value of merchandise imports increased 135%. The increase in volume of imports, after adjustment for price increases, was 126%. Australia's merchandise imports were dominated by Machinery and transport equipment (SITC 7), which accounted for around 46% of total imports from 1994 onwards. Included in this SITC Section are motor vehicles and parts, computers, aircraft and telecommunication equipment.
MAJOR IMPORT COMMODITIES
Table 4 shows, for eleven major 3 digit SITC Group import commodities, the value of their imports and share of Australia's import trade, at the beginning and end of the decade.
Seven of the eleven groups selected are from SITC Section 7. Over the period, the total contribution of the eleven major commodities to total imports increased from 30.8% to 38.6%, indicating an increased overall importance of these commodities.
There was a strong increase in the value of imports of Crude petroleum oil (SITC 333) from 1998 to 2000 due to increased international oil prices and a fall in the Australian dollar. This occurred despite a fall in the quantity of crude oil imported in 2000, due to Australia's increasing use of domestically produced crude petroleum oil.
The value of imports of crude petroleum oil increased as a proportion of total imports from 3.1% in 1991 to 6.3% in 2000. Australia's major import sources are Indonesia, United Arab Emirates, Saudi Arabia, New Zealand, Viet Nam, and Papua New Guinea.
The value of imports of Petroleum oil, not crude (SITC 334) slowly declined between 1991 and 1999, then rose to $1,767 million in 2000. This category mainly comprises refined petroleum oil. As a proportion of total imports, imports of refined petroleum oil decreased from 2.5% in 1991 to 1.5% in 2000.
Over the period from 1991 to 1999, the average unit value varied from $0.14 per litre to $0.19 per litre. In 2000 the average unit value rose to $0.32 per litre as a result of higher world prices and a weaker Australian dollar. However the quantities imported have generally declined over the decade, with 95% of the refined petroleum required by Australia now supplied by its own refineries. The major import sources are Saudi Arabia, Singapore, Indonesia and the United Arab Emirates.
Over the decade there has been a strong increase in imports of Medicaments (SITC 542), from 1.3% of total imports in 1991 to 2.8% in 2000. The category includes pharmaceuticals containing penicillin, antibiotics and insulin. The reason for the more rapid increase from 1998 to 2000 is the development and subsequent import of more expensive, specialised drugs.
The United Kingdom has maintained its position as Australia's main source of medicaments, accounting for between 22% and 31% of total imports. The USA, which was ranked as the sixth major source of these imports in 1991, increased its ranking to be the second major supplier with 18% of the market share in 2000. Germany is also a major supplier.
COMPUTERS AND PARTS
Imports of Automatic data processing machines (SITC 752) have increased steadily over the decade to $5,498 million in 2000. As a proportion of total imports, it has increased from 3.7% in 1991 to 4.7% in 2000. Items included in this category are personal computers, storage units (disk drives) and visual display units (monitors). The USA remains Australia's main source of automatic data processing machines, even though there has been a significant rise in imports from Singapore and Malaysia.
Although the value of Computer parts and accessories (SITC 759) imported has increased by 91% from $1,317 million in 1991 to $2,518 million in 2000, their importance as a proportion of total imports has decreased from 2.7% in 1991 to 2.2% in 2000. The USA has maintained its position as market leader, even though there has been an increase in competition from Asian countries. The main type of parts and accessories imported is computer hardware, such as motherboards and memory.
There has been a very large increase in imports of Telecommunications equipment and parts and accessories (SITC 764), particularly since 1998. By 2000, telecommunications equipment accounted for 5.5% of Australia's total imports, compared with only 2.2% in 1991. This can be attributed to the increased use of mobile phones, modems and apparatus for digital line systems and networks. The import of equipment used for establishing telecommunication systems between Australia and North America, South America and North Asia contributed to the increase. The main sources of these imports are USA, Japan, Republic of Korea, United Kingdom and Sweden.
Passenger motor vehicles (SITC 781) has been the most significant import group, by value, since 1992. In 2000 it accounted for 6.7% of Australia's total imports, compared with 4.5% in 1991. Japan has remained Australia's major source of imported passenger motor vehicles over the decade, but its share of the market declined from 83% in 1991 to 60% in 2000. Germany and Korea increased their market shares over the decade.
The increase in the value of imports of passenger motor vehicles can be attributed to a decrease in the number of domestically produced models, growth in demand for small vehicles, reduction in tariff rates for imported cars and greater competition in the passenger motor vehicle market. The slowdown in 1999 can be attributed to both the Asian economic crisis and an oversupply of foreign made passenger motor vehicles in Australia.
Australia's imports of Motor vehicles for the transport of goods (SITC 782) have increased steadily over the decade, accounting for 1.7% of total imports in 1991 and 2.1% in 2000. Japan supplied 85% of these imports in 1991, but by 2000 this had decreased to 53%, with Germany and the USA increasing their market shares.
Imports of Motor vehicle parts and accessories (SITC 784) similarly increased steadily over the decade. As a proportion of total trade, there was an increase from 1.7% in 1991 to 2.2% in 2000. Japan was again the main supplier contributing 51% in 1991 and 48% in 2000.
The value of Aircraft and associated equipment (SITC 792) imports fluctuated over the decade, due to the irregular demand for and the high price of new aircraft. From 1998, there has been an increase in imports due mainly to new airlines entering the domestic market. It should be noted, that aircraft which are imported under an operational lease are not included in merchandise imports.
The value of imports of Non-monetary gold (SITC 971) showed a significant peak in 1998 due to large imports of non-monetary gold from Asia for processing in Australia and subsequent export, one of the consequences of the Asian economic crisis.
BALANCE OF TRADE
The graph below shows Australia's total exports and imports over the decade, with the balance of trade (exports less imports) also included.
Australia's exports increased by 106% and its imports increased by 135% over the decade. While there was a trade surplus at the beginning of the decade, for most of the decade Australia experienced a trade deficit. A weaker Australian dollar helped narrow this deficit in 2000.
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