As Asia grows, exports change
This will lift demand for gas and base metals - copper and nickel - from Australia, which will eclipse the demand growth expected for iron ore and coal, both of which are used in first-stage industrialisation when the need for steel surges.
Australia's mining industry expertise will also drive orders for its industrial machinery from mining provinces in Asia, Latin America and Africa.
This sector will emerge as the third prong in future export growth, after energy and base metals, according to a forecast from HSBC and Oxford Economics.
Malaysia will emerge as one of our biggest markets, beating out the US to emerge as the No.5 destination for Australia's exports, trailing only China, Japan, Korea and India.
This projection comes as commodity analysts tip weakness in iron ore prices for the balance of 2013 amid slowing demand growth from China, which will flow on to coal prices and place renewed pressure on mining company earnings.
"There will be a structural shift" in Australia's export profile, head of commercial banking at HSBC Australia James Hogan said.
"Rather than focusing on steel manufacturing, there will be a shift towards the supply of materials for producing high-end consumer goods, so this will boost demand for copper and nickel, and also energy.
"There will be a degree of volatility . . . but the trend is clear."
Asia, which already accounts for more than 70 per cent of Australia's exports, up from around 50 per cent in 2000, is expected to have an even greater focus with HSBC and Oxford Economics forecasting this will top 80 per cent by the end of the decade.
"The trend will continue to 2030, with further concentration on Asia," Mr Hogan said.
This will be underscored by countries such as Vietnam, which will emerge as a significant new destination for Australian exports, which are forecast to grow by 8 per cent to 9 per cent a year over the next 15 years or so.
This will put it ahead of the forecast growth in Australian exports to China, where annual growth will slow to around 7 per cent a year between 2020 and 2030, from around 9 per cent at present.
Australia is already the sixth-largest producer globally of copper, exporting around 2 million tonnes annually, with large mines at Mount Isa and Olympic Dam. It has the dominant position in nickel, with around a third of the global reserves of the metal.
BHP is one of Australia's largest nickel producers, with mines at Mount Keith and Leinster, along with refineries and smelters.
Frequently Asked Questions about this Article…
HSBC and Oxford Economics forecast a structural shift: Australia’s export mix will move from iron ore and coal towards energy (gas), base metals (notably copper and nickel) and industrial machinery. For everyday investors, this matters because it changes which commodity sectors and related mining or equipment companies may see stronger long‑term demand as Asia’s middle class expands.
The article says rising Asian incomes are shifting industrial demand from first‑stage steel production to materials used in higher‑end consumer goods and energy technologies. That boosts copper and nickel demand (used in electronics, batteries and other higher‑value manufacturing) relative to iron ore and coal, which are more linked to early‑stage steelmaking.
Commodity analysts cited in the article expect iron ore prices to be weak for the remainder of 2013 due to slowing Chinese demand. That weakness can flow through to coal prices and place renewed pressure on mining company earnings, particularly for firms heavily exposed to iron ore and thermal coal revenues.
Asia already accounts for more than 70% of Australia’s exports (up from roughly 50% in 2000) and is forecast to top 80% by the end of the decade. HSBC/Oxford predict Malaysia will become the No.5 destination for Australian exports (ahead of the US), trailing China, Japan, Korea and India. Vietnam is also highlighted as an emerging and fast‑growing destination.
The article reports exports tied to Vietnam are expected to grow strongly — around 8–9% a year over the next 15 years or so. By contrast, export growth to China is forecast to slow to roughly 7% a year between 2020 and 2030, down from about 9% at the time of the article.
Yes. HSBC and Oxford Economics expect Australia’s mining industry expertise to drive orders for industrial machinery from mining provinces across Asia, Latin America and Africa. This sector could become a third export growth pillar (after energy and base metals), suggesting opportunities beyond pure commodity producers — for example, companies supplying mining equipment and services.
According to the article, Australia is the world’s sixth‑largest copper producer, exporting about 2 million tonnes annually, and holds a dominant position in nickel with roughly one‑third of the global reserves of the metal.
The article notes BHP is one of Australia’s largest nickel producers, operating mines at Mount Keith and Leinster and also owning refineries and smelters — making it a significant player in the country’s nickel supply chain.
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