Mining boom still has legs

China's exports and imports surge

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Good news out today for Australia's economy and our miners.

China appears to be experiencing an economic rebound, after exports surged 25% and imports jumped by 28.8%, compared to the previous year. Analysts had expected exports to rise by 17%, and January's trade surplus was US$29.2 billion, blowing past market expectations of US$22 billion.

We've also seen prices for iron ore surge higher, and the commodity is currently trading around US$155 a tonne, having recovered from a fall to below US$90 a tonne in September 2012.

Australia's iron ore majors, Rio Tinto Limited (ASX: RIO), BHP Billiton (ASX: BHP) and Fortescue Metals Group (ASX: FMG) have all lifted production levels in recent years, and will be making hay while the sun shines. Analysts expect iron ore prices to average between US$100 to US$120 a tonne this year, while Fortescue's CEO, Nev Power is predicting US$120 a tonne.

With China's exports and imports growing, the iron ore price may stay around current levels for some time yet. We could also see a recovery in other commodity prices, with coal and copper prices depressed over concerns on Chinese demand. That would be great news for Australia's economy, with iron ore and coal making up a high percentage of our exports and contributing a big chunk of our GDP.

It could also mean that the federal government will finally achieve some decent revenues from its controversial Minerals Resource Rent Tax (MRRT). Today, the world's best treasurer, Wayne Swan revealed that in the first six months, the tax had raised just $126 million.

Foolish takeaway

The Reserve Bank has said that mining investment in Australia will peak this year, and the central bank reduced its expectations of economic growth and inflation forecasts. It may be forced to revisit those expectations if China's rebound continues at this rate.

Oil, copper, and gold continue to be in high-demand — and their popularity doesn't look to be slowing. We've uncovered three companies poised to benefit from the rising prices of these commodities. Get our brand-new report — "3 High-Risk/High-Reward Resources Stocks" — FREE!

More reading

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Mike King owns shares in BHP.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »