Resources and energy quarterly: December 2024

Australian resources and energy exports are forecast to continue to ease after the record peak seen in 2022–23.

• The near-term outlook for Australian resource and energy commodity exports is little changed in net terms since the September 2024 REQ. Steady world economic growth (and hence commodity demand) are forecast in 2025 and 2026.
• Australia’s resource and energy exports are forecast to fall to $372 billion in 2024–25 from $415 billion in 2023–24 as commodity prices settle at lower levels than in 2022–23. Export earnings are expected to decline to $351 billion in 2025–26.
• Strong demand has seen the gold price hit a new record high. Alumina prices have surged and iron ore exploration expenditure in Australia is at the highest level in a decade.

Iron ore prices are expected to ease over the outlook to 2026 due to weak global demand.

• Spot iron ore prices rebounded in October 2024, driven by positive sentiment associated with China’s economic policy announcements, but have since moderated.
• Australian iron ore export volumes over H2 2024 have continued to increase, reflecting improved productivity and ongoing ramp ups in newer mines. Export volumes are expected to rise steadily, increasing by around 1.7% a year over the next two years. 
• Lower prices projected over the outlook period will reduce Australia's iron ore export earnings from $138 billion in 2023–24 to $108 billion in 2024–25 and $96 billion in 2025–26.

Seaborne metallurgical coal prices stabilised recently after falling through most of 2024. Increased Australian supply is forecast to result in stable prices despite a modest recovery in demand.

• Metallurgical coal prices recovered from September lows to average just above US$200 a tonne over October and November 2024. Prices are expected to remain at a similar level throughout the forecast period.
• Relatively low prices compared with 2023–24 are forecast to reduce export earnings from $54 billion in 2023–24 to $41 billion in 2025–26.
• Export volumes are expected to rise from 151 Mt in 2023–24 to 174 Mt by 2025–26.

Thermal coal markets have remained tight in 2024. Demand from China is higher than expected. Trade measures against Russia are reducing supply and sustained hot weather across Asia has boosted power demand.

• Thermal coal spot prices are expected to gradually decline over the outlook period, from US$136 a tonne in 2024 to US$114 a tonne by 2026. 
• Australia’s thermal coal export earnings are expected to ease from $37 billion in 2023–24 to $29 billion by 2025–26, as prices decline.
• Australian export volumes are expected to be stable at around 205 Mt per year.

Gas markets have stabilised over the past few quarters, but 14 consecutive months of record global average temperatures have pushed up Asian LNG demand, increasing prices.

• Australia’s LNG export revenues are forecast to decline from $69 billion in 2023–24 to $60 billion by 2025–26. This outlook is largely unchanged from the September 2024 Resources and Energy Quarterly. 
• The fall in export earnings is expected to be largely driven by lower LNG prices, though depletion of some gas reserves could affect volumes. 
• LNG prices remain relatively high, but new supply from the US and Qatar is forecast to bring prices down to around US$10/MMbtu by 2026.

Crude oil prices are falling as strong expected supply and weak demand puts downward pressure on prices. Export earnings are expected to fall as prices and output fall.

• The Brent crude oil price is forecast to fall from an average US$81 a barrel in 2024 to US$69 a barrel in 2026. The fall is expected to be driven by weak world oil demand and gains in ex-OPEC production.
• Australia’s crude and condensate output is forecast to fall steadily over the outlook period as mature fields see diminishing output.
• Australia’s crude and condensate export earnings are forecast to fall from A$13 billion in 2023–24 to A$8.8 billion by 2025–26, as prices and output fall.

Uranium export earnings have been revised up due to strong prices and increased export volumes from the new Honeymoon mine. 

• Uranium prices have fallen to around US$80 a pound, down from a historical high of over US$100 a pound in early 2024 as the market stabilises from a supply shock in the March quarter.
• Prices are expected to rise to US$88 a pound in 2025 and US$94 a pound in 2026 as demand exceeds supply and inventories are drawn down.
• Australian export earnings are forecast to rise from $1.4 billion in 2024–25 to $1.7 billion by 2025–26.

Australian gold export earnings have been revised down slightly due to an exchange rate revision but remain strong. 

• Gold prices are forecast to rise by 22% (year on year) to average US$2,365 an ounce in 2024. Prices have been boosted by official demand and are forecast to remain elevated in 2025 before falling in 2026.
• Australian gold production increased by 0.5 tonnes in the September quarter to 74 tonnes. Yearly gold production is forecast to fall slightly in 2024–25 before resuming growth in 2025–26 as new mines and mine expansions come online.
• Earnings forecasts have been revised down by $0.4 billion to $34 billion in 2024–25 due to the adoption of a slightly stronger forecast for the AUD/USD. Earnings forecasts for 2025–26 remain at $35 billion.

Export earnings for 2024–25 have been revised up. The alumina price is expected to remain high on the back of reduced supply of bauxite and alumina.

• The free on board (FOB) Australian alumina price reached record highs in the December quarter due to reduced supply of alumina and bauxite from Guinea and Australia. High alumina prices are expected to push the London Metal Exchange (LME) primary aluminium spot price above US$2,500 a tonne in 2025 and 2026.
• Over the outlook period, Australian primary aluminium output is expected to be stable at 1.6 million tonnes (Mt) a year. Australian alumina output may fall under 18 Mt a year, but Australian bauxite output should rise to over 100 Mt a year.
• High Australian alumina prices and bauxite export volumes are forecast to drive Australia’s AAB export earnings to a new record high of $20 billion in 2024–25.

Australia’s copper earnings in 2024–25 and 2025–26 have been revised up slightly, driven by higher volumes. 

• Copper prices have declined by around 6% since the beginning of the December quarter, mainly due to market response to economic policy announcements from China and the impact of a rising US dollar. Prices are expected to average around US$9,220 a tonne in 2024 and rise to US$9,700 a tonne by 2026.
• Global copper demand is forecast to grow by around 3% in 2025 and 2026. Growth will primarily be driven by expanding manufacturing activity, low emission technologies and data centres.
• Australian copper export earnings are forecast to at $15.3 billion in 2024–25 and $16.2 billion in 2025–26.

Australia’s nickel export earnings continue to be impacted by falling nickel prices and production cuts.

• Nickel prices have experienced large volatility in the second half of 2024. Prices fell from a peak of US$18,300 a tonne in early October, and are now forecast to be approximately US$16,915 a tonne by the end of the December quarter. The fall in price was driven by continued global oversupply of nickel, combined with weakening demand over the period. A moderate improvement in prices is expected over 2025, with prices forecast to rise to US$17,625 by EOY 2025.
• World nickel demand fell (quarter-on-quarter) in the September quarter, driven by a decrease in Chinese nickel consumption. This was led by weakness in China’s stainless steel and battery production over the period. However growing nickel usage in Indonesia – a consequence of the country’s burgeoning stainless steel and EV sectors – helped to offset the fall in China.
• Major closures announced through the first half of this year are expected to see Australian mined and refined production fall by 41% overall in 2024. Reduced output and weaker prices are expected to see Australian nickel export earnings fall by 61% to $1.4 billion in 2024–25, and decline further to $1.0 billion in 2025–26.

Export earnings for 2024–25 and 2025–26 have been revised up due to higher volumes and stable prices. However, Australia’s mine production forecast has been revised down in 2025–26 following scheduled closures and lower output guidance for some zinc mines.

• Zinc demand is expected to grow moderately in 2025, following the large falls in 2023. The anticipated growth will be largely driven by galvanised steel usage in the manufacturing, construction and automotive industry.
• 2025 prices are expected to be little changed from 2024 at about US$2,770 a tonne, before dipping slightly to US$2,710 a tonne in 2026.
• Australian refined zinc output is expected to boost export earnings to $4.3 billion in 2024–25, then ease to $3.9 billion in 2025–26 due to lower forecast price.