Falling lithium prices weigh on export prices: ABS
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The news: The fall in global lithium prices has driven down the Export Price Index (EPI) by 2.1% in the March quarter, new figures by the Australian Bureau of Statistics (ABS) show.
The numbers: The EPI fell 2.1% during the three months to March, and dropped 8.3% over the year.
Prices for Australia's resources drove the quarterly fall, with non-rural exports down 2.7% in the March quarter and 9.4% through the year. This included a 58.1% fall in the price of crude fertilisers. Within this category is lithium, which had unprecedented falls in price.
As well as the large fall in lithium prices, there were smaller price falls for other major resource exports, including metalliferous ores and metal scrap (-1.6%), coal, coke and briquettes (-0.8%), and natural and manufactured gas (-1%).
Partly offsetting the price falls in non-rural exports was a rise in rural export prices, up 0.4% for the quarter, which followed four consecutive quarterly falls. Through the year to the March quarter 2024, rural export prices fell 10.1%, up from an 18.4% annual fall during the December 2023 quarter.
Meanwhile, the Import Price Index fell 1.8% in the March quarter 2024 and lowered 0.7% through the year. Driving the quarterly fall was petroleum and petroleum products, down 6.4%.
The ABS said that despite OPEC+ nations extending supply cuts to help push oil prices upward, prices have not returned to the levels seen in the December quarter 2023. Overall, this led to a quarterly fall in prices for imported petroleum.
Weak consumer demand alongside an appreciating Australian dollar led to price falls for a range of imported consumption goods, which dropped 1.6%, including medicinal products, household electrical items and clothing and footwear.
The appreciating Australian dollar also contributed to lower prices for capital goods, falling 0.7% this quarter. However, the fall was largely offset by price rises in telecommunications equipment and industrial transport equipment.
The context: Lithium prices fell in the March quarter due to excess global supply. Investment in global lithium production, driven by the high prices of 2022 and the forecasts for growth in electric vehicle sales, led to a more than 40% annual increase in global lithium output in 2023.
However, prices have been driven down by slower-than-expected electric vehicle adoption. This reduced lithium demand, as battery manufacturers draw down on record high inventories.
The ABS said that meat and meat preparations drove the rise in rural exports during the quarter, as global demand for meat remains strong, including increased demand out of the US as they continue to experience supply shortages.
The source: ABS media release
