CHART OF THE DAY: Why Australians go bonkers over the iron ore price

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From the book of a picture speaking a thousand words comes this telling chart on Australia’s most valuable export item – iron ore.

It shows the value of monthly Australian iron ore exports, without seasonal adjustments, as a percentage of all Australian goods exports and total Australian exports, including services.

As a percentage of total exports, iron ore hit a record high of 34.8% in September 2013. In November of that year it made up a whopping 46.4% of total goods exports.

Since those heady days when the value of iron ore exports regularly topped $6 billion per month (the record was $7.197 billion in December 2013), plunging iron ore prices have certainly taken a toll, completely overshadowing a continued upward trend in iron ore export volumes.

In June 2015, the value of iron ore exports was $3.818 billion, close to half the value seen in December 2013. As a percentage the figure represented 18.7% of total exports, and 25.3% of total goods exports.

While still huge numbers, they’re significantly below the levels seen just 18 months earlier.

The decline in iron ore prices has seen Australia log some of the largest trade deficits on record in recent months.

It also explains why many Australians pay such close attention to the increasingly-wild swings being witnessed in the spot price.

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