Australia’s trade balance was out on Tuesday. It showed a deficit of $AU925 million, a beat on market expectations of -$1.6 billion.
In its Asia Morning Call note today, Soc Gen said the surprise came from exports which at 0.6% month-on-month during a time when commodity prices were falling is a “solid” result partly accountable to strong volumes.
The ABS data shows unit value for lump iron ore (higher quality) was up 10% month-on-month in November while fines (lower quality) jumped a whopping 37% in the same period. While the figures could still be subject to revision Soc Gen said the data “looked decidedly odd”.
“This flies in the face of the spot data from China, which indicate price declines (in fines) of just over 8% mom in November (though we recognize that given the time it takes to transport iron ore from Australia to China, Australia’s exports to China data for a given month correspond more closely to China’s imports from Australia data for the subsequent month).”
The note warned the figures could be revised to be less positive than they currently appear.
Here’s the chart from the ABS release which Soc Gen is talking about.