Australia trims outlook for commodities peak as prices weaken

• U.S.-China trade tensions mean there’s a weaker outlook for Australia’s base metal and energy exports, though the wider industry is benefting from an increase in gold export earnings and the depreciation of the Australian dollar
• Cutbacks in global manufacturing are “already flowing through into commodity markets,” the department’s Chief Economist David Turvey says in the report. “Any further decline in Chinese economic growth could have even more significant effects on global supply chains for a range of technology and other products,” he says.

Commodity forecasts:

• Iron ore seen averaging $80.10/ton in 2019, $61.40/ton in 2020 and $57.50/ton in 2021, unchanged from previous forecasts. Projections refer to spot ore with 62% content, FOB Australia.
• Newcastle benchmark thermal coal forecast to average $95/ton in 2019 and decline to $72/ton in 2020 as demand weakens.
• Spot coking coal is forecast to average $186/ton in 2019 and $168/ton in 2020.
• Oil prices are seen declining on higher output, including from the U.S. Brent crude to average $65.70/barrel in 2019.
• Gold seen supported by trade tensions and geopolitical risks and is forecast to average $1,391/ounce in 2019. Prices in Australian dollar terms to rise to a record annual average A$2,042 an ounce in 2020.
• Copper prices experienced increased volatility on trade tensions and reduced economic activity, though will be supported longer-term by rising consumption. Prices to average $5,938/ton this year and $6,193/ton in 2020.
• Lithium prices are expected to see further falls after declining about a third year on year amid surging supply. Growth in global lithium consumption has slowed in response to challenging economic conditions and policy changes in China