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Published on: Friday, July 14, 2017

by James Dunn

China’s economy has regained momentum, with a surprising jump in both imports and exports in June. Firmer global demand lifted June exports by 11.3% in US dollar terms, up from the 8.7% growth in May. In renminbi terms, exports grew by 17.3% year-on-year in June, while imports climbed 23.1%. China’s trade surplus expanded US$42.8 billion ($55.6 billion), the second-highest level for 2017, with strong global demand expected to underpin export growth into the second half of 2017. Domestic demand also showed surprising strength, with imports rising by 17.2% (in US$) over the month. The growth in imports is good news for Australia’s miners, with iron ore shipments surging in June by 15.4% on an annualised basis, up from 5.5% growth in May.

China’s iron ore imports this year are expected to break 2016’s record of 1.024 billion tonnes, after first-half figures showed another jump in cargoes. In the six months to June 30, imports rose to 539 million tonnes, 9.3% higher than the same period in 2016. Shipments in June were 94.7 million tonnes, up from 91.5 million in May, according to customs data reported yesterday. China is hoovering up ever-larger volumes of low-cost ore to meet resilient demand from mills, which benefited from rising steel prices in the second quarter. The increase is helping the largest miners, including BHP and Rio Tinto, as well as Brazil’s Vale SA, which is bringing on production from its giant S11D project. Australia’s Department of Industry, Innovation and Science estimates that iron ore exports from Australia could rise to 885 million tonnes in 2018 and 897 million tonnes in 2019, from 851 million this year. The department says Australia's earnings from ore exports will ease to $54.7 billion in 2018-19, from $58.2 billion in 2017-18 and $64.5 billion in 2016-17.

The United States is on track to become the world's second largest exporter of liquefied natural gas (LNG) by the end of 2022, just behind Australia and ahead of Qatar, the International Energy Agency (IEA) says. Overall, the IEA expects global LNG export capacity to reach 650 billion cubic metres (bcm) a year by the end of 2022, compared to less than 452 bcm a year in 2016. Of that amount, Australia would have the capacity to export 117.8 bcm a year of LNG, followed by the US with 106.7 bcm a year and Qatar with 104.9 bcm a year, the IEA says. Australia would stay top by adding 30 bcm a year of capacity to its existing capacity by the end of 2022, but the US, which has seen shale gas output surge, is expected to add about 90 bcm a year to its export capacity.

Worldwide PC shipments fell 4.3% year-on-year in the second quarter, the 11th straight quarter of declining shipments, according to international research firm Gartner. The PC industry is in a five-year slump, and shipments in the second quarter of this year were the lowest quarterly volume since 2007. Gartner says demand is being hit by higher PC prices due to the impact of component shortages for DRAM (dynamic random access memory), SSDs (solid state drives) and liquid crystal display (LCD) panels. Gartner says the approach to higher component costs varied by vendor: some decided to absorb the component price hike without raising the final price of their devices, while other vendors transferred the costs to the end-user price. While in the business market prices are typically locked in based on the contract, the price hike is having a greater impact in the consumer market, where buying habits are more sensitive to price increases. Gartner says many consumers are willing to postpone their PC purchases until the price pressure eases.

Australian renovation loan volumes are at 7-year highs, with loans for alterations and additions up 10.1% in the year to May. The annual growth for all housing finance was 3.1% in May, with loans for construction and purchase up 2.9%. CommSec says the data suggests that more people have decided to stay put in their current home, deciding to add extra rooms or to revamp kitchens and bathrooms. Conversely, non-housing loan commitments are at the lowest levels for over 14 years. Personal loans are down 18.4% on a year ago, and are running at 14½-year lows.

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