The Border Watch : January 6th 2015
Business Oil’s price plunge hurt economy Iron ore export predictions provide reason for optimism, economists say MELBOURNE: Commodity prices suffered their greatest fall in six years in 2014 and dealt a hit to the Australian economy, but there is scope for optimism. Multinational bank HSBC has calculated commodity prices fell 30 per cent last year, with oil’s plunge the biggest driver. The price falls are reducing Australia’s export earnings by tens of billions of dollars. The news is not all bad, with HSBC predicting a slight recovery this year for iron ore, the nation’s most valuable export, and extra income from the ramp up in natural gas exports. Oil’s fall was also having a potential net benefit, due to the savings households were making from cheaper fuel. The key risks for Australia are further falls in prices, due to weaker growth in China or an over-supply of commodities squeezing economic growth and national income, HSBC said. GDP growth is below Coke open to talks on cash for cans MELBOURNE: Drinks maker Coca-Cola Amatil will hold talks with the NSW Government about a proposed cash-forcontainers scheme. The Government has invited industry players for talks about the potential drinks container deposit scheme despite many players, including Coca-Cola Amatil, having been fierce opponents in the past. Similar schemes already operate in South Australia and the Northern Territory, with people receiving 10c rebates for each drinks container they return for recycling. The Baird Government is considering the scheme as a way to boost recycling and reduce litter, with the aim of making NSW the state with the lowest litter count per capita in Australia. Coca-Cola Amatil said it would work collaboratively, co-operatively and in good faith with the NSW Government. “The Government has stated that it believes that greater commitment and contribution from industry is required to reduce packaging waste litter and increase packaging recycling,” the drinks giant said yesterday. But the company couldn’t say how much the proposed scheme could affect it financially. Its decision to talk to the Government comes just two years after it launched legal action to stop the NT introducing a cash-forcontainers scheme. In 2013, Coca-Cola Amatil branded the NT’s scheme old fashioned and inefficient, saying it would increase soft drink prices. AAP Crushing debate: Coca-Cola has been asked to participate in a recycling deal. Picture: AAP Dollar hits lowest level in five years SYDNEY: The Australian dollar has dived to its lowest level in five-anda-half years. At yesterday’s close, the local currency was trading at US80.50c, down from US81.37c on Friday. Yesterday afternoon it reached US80.43c, its lowest level since July 2009. Commodity price weakness and US dollar strength continued to weigh on the local unit. Commonwealth Bank chief currency strategist Richard Grace said the local currency had been affected by euro selling amid thin volumes. “The Australian dollar was caught up in the [US] dollar strength and it moved lower as a result,” Mr Grace said. “The decline in the euro to fresh Dropped: The Australian dollar has sunk to US80.50c. lows, below the 2010 euro crisis lows, was a reflection of a thin market.” He said Australian dollar losses against the US dollar had been contained. 10 - The Border Watch, Tuesday, January 6, 2015 Picture: AAP Manufacturing took end of year tumble SYDNEY: Australia’s manufacturing industry has declined sharply, with the lower Australian dollar failing to lend a hand. Manufacturing fell by 3.2 points to 46.9 in December, according to the Australian Industry Group’s performance of manufacturing index (PMI) yesterday. The index dropped well below the 50-level that separates expansion from contraction, despite the Australian dollar having traded at four-and-a-half year lows during December. Although the currency had AAP depreciated, survey respondents said the level of the Australian dollar was still encouraging strong import competition. The figures were disappointing, but not surprising, Ai Group chief executive Innes Willox said. “We would have hoped to have seen a stronger Australian PMI in the leadup to Christmas, but the finding is consistent with other publicly released data,” Mr Willox said. “Business sentiment and appetite for investment remain weak. “The closure of Australian automotive assembly facilities now under way, plus the rapid decline in mining investment activity, are also weighing heavily on demand for locally made machinery inputs and components.” Four of eight manufacturing subsectors expanded, including food, beverages and tobacco. The textiles, clothing, footwear, furniture and other manufacturing segment experienced its fastest pace of expansion in six years. AAP trend at less than 3 per cent, with the non-mining sectors that represent 90 per cent of the economy yet to step up and replace falling resources investment. HSBC predicted iron ore prices would rebound this year from a current $US68 a tonne, to an average of $US85 and $US80 long term. That is a far cry from the $US134.20 it started at last year. The reason for a recovery is a long-anticipated reduction in high-cost Chinese iron ore mining that is produced at an estimated $US90-110 a tonne. “We’re not that downbeat. Those Chinese producers are running at a large cash loss and we would expect that in 2015 you might see some of that iron ore come out of the market,” HSBC Australia chief economist Paul Bloxham said. “That should provide a bit of support for the iron ore price.” The start of LNG exports last week from one of three mega-projects at Gladstone in Queensland was also a positive, despite the fact gas was linked to the oil price, he said. “Our view is that that is a far bigger story than the fall in gas prices seen recently, in terms of the overall impact on Australia,” Mr Bloxham said. “There is a 330 per cent rise forecast in gas exports out of Australia from 20152019 ... the [resources] investment fall will be more than offset.” AAP in Brief Insurers, banks to help bushfire victims MELBOURNE: Insurers and major banks have promised to do all they can to help the victims of the South Australian bushfires. The Insurance Council of Australia has declared a catastrophe for bushfireaffected regions and has set up a team to work with affected policyholders. Meanwhile, banks were offering relief packages. Bank of Queensland appoints new CEO SYDNEY: Former Bankwest boss Jon Sutton has been appointed the new chief executive of Bank of Queensland. Mr Sutton, who joined BoQ in 2012, has been acting chief executive since the departure of Stuart Grimshaw in September 2014. The board has made his role permanent after an international search for a CEO. New Year share market boost MELBOURNE: The Australian share market has started the first full week of trading in the new year by finishing marginally higher. Energy stocks lifted slightly, and the big miners and banks were mixed. Quay Equities head of trading Tristan K’Nell said the local bourse had started fairly well despite tepid leads from United States markets, but subsequently gave up much of its gains. Lower dollar helped super returns SYDNEY: Super fund returns for 2014 were less than half the year before, but still not bad, thanks largely to a lower Australian dollar. The average “balanced” investment option – which favours growth assets like shares and property – earned 7.5 per cent through 2014, according to research firm SuperRatings. The outcome for the year is a reminder of the value of diversification, including diversification across national borders. Qantas adds special Anzac Turkey flight PERTH: Qantas will add a special flight for Australians to attend Anzac centenary commemoration services in Turkey. The airline will fly a reconfigured Boeing 747 aircraft which seats 364 passengers from Sydney to Istanbul via Perth on April 21, subject to regulatory approval. Qantas said it was proud to offer the special return flight to Turkey to mark the April 25 Anzac landing at Gallipoli.
January 2nd 2015
January 7th 2015