Australia is still shipping out mountains of iron ore, barrels of gas, and tonnes of beef. But what it’s getting paid for them has dropped sharply. That gap between steady volume and falling price is quietly draining billions from the economy each month.
So what’s going on?
The answer isn’t one thing. It’s a mix of global shifts in demand, the easing of wartime commodity spikes, and the simple truth that Australia doesn’t set the price for most of what it sells.
Start with iron ore. It remains Australia’s single biggest export, worth over $120 billion a year at its peak. But prices have dropped as China’s appetite for steel has waned. The country’s property sector is still under pressure, its economy is slowing, and large infrastructure builds aren’t coming thick and fast like they did in the past. That has flowed directly into lower demand for iron ore, and with it, weaker prices.
Then there’s coal. Thermal coal prices exploded in 2022 after Russia’s invasion of Ukraine forced Europe to scramble for alternatives. That rush is over. Supply chains have adjusted, alternative producers have stepped up, and prices have settled back down. Australia is still exporting plenty, but it’s getting less for each tonne.
The story is similar with liquefied natural gas (LNG). After record highs in early 2023, LNG prices have softened. Milder winters, increased production in the United States and Qatar, and lower Asian demand have all played a part. Again, volume holds up, but prices are off their peak.
Agricultural exports have had their own price cycles. Wheat and barley surged after the Ukraine war began, but global production has stabilised. Weather patterns have improved. As a result, food commodity prices have eased, bringing Australia’s export earnings down with them.
All this is happening while the Australian dollar stays relatively weak. Normally, a soft dollar would help exporters by making Australian goods cheaper for overseas buyers. That effect is still there. But it’s not enough to make up for the global price falls.
The Reserve Bank’s commodity price index shows a clear trend. Over the past 12 months, the index is down around 25 percent. Economist Stephen Koukoulas flagged this in recent commentary, calling it one of the most under-analysed reasons for Australia’s sluggish economic performance. “The tonnages are holding up, but the prices we’re getting have collapsed,” he said.
Part of the problem is that Australia is a price taker. It sells what the world demands, but it does not get to decide the price. That means global shocks, trade tensions, or slowdowns in big markets like China or Europe directly affect our earnings.
There’s also growing competition. Brazil continues to ramp up its iron ore exports. Qatar and the US are expanding their LNG capacity. Canadian wheat is flooding into global markets. The more supply there is, the more pressure there is on prices.
None of this is Australia’s fault. But it does expose how dependent the country remains on a handful of export categories. When prices are high, we look lucky. When they fall, income shrinks fast.
The end result is a 15 percent drop in monthly goods export receipts since 2022. That’s the difference between earning $50 billion and earning $42 billion each month. Over a year, it adds up to nearly $100 billion less in national income.
That money would have gone into wages, taxes, investment and growth. Instead, it’s missing. And while the volumes look stable, the bottom line tells a different story.
Australia doesn’t need to panic. But it does need to stop assuming exports are doing fine just because ports are busy. The price we get matters as much as the amount we ship. Right now, both Treasury and the RBA would do well to pay closer attention to that gap.
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