The Office of the Chief Economist says Australia is set to record its best year of resources exports.

That’s contained in the latest Resources and Energy Quarterly (REQ) which both reviews market movements and forecasts Australia’s exports.

It says the fortunes of Australian resources exports are tied to a rebounding world economy and are likely to hit a new record of $310 billion, with more than half coming from iron ore.

Related: LNG exports fuel strong 2020 finish for Gladstone trade

The movement represents a 50 percent increase in iron ore prices, from a record $100 billion earn in 2019-20.

Base metal prices have all surged back above levels reached just before the COVD-19 pandemic, the report states.

It says strong demand and worries over higher taxes on South American mines have raised fears of a fall in mining investment in the continent, boosting the copper price to more than US$10,000/tonne.

The reports points out that coal markets continue to adjust to China’s informal import restrictions on Australian coal. 

Thermal coal prices have surged in China, as a critical shortage emerges ahead of the Northern Hemisphere summer — when cooling demand raises the need for increased power output. 

Surging demand from steel producers has seen Australian metallurgical coal prices regain all of the losses incurred as a result of China’s informal import restrictions. 

That strength is likely to carry on as vaccine rollouts around the world start to have an impact, the report says.    

The authors say Australia’s resource and energy commodities are benefiting from stimulatory monetary settings and infrastructure-focused stimulus spending, which has seen iron ore, metallurgical coal and base metals prices rise.

Going forward, resource and energy exports are forecast to reach a further record $334 billion in 2021–22 before easing to just over $300 billion in 2022–23. 

Export volumes are forecast to grow modestly over the outlook period, but prices appear set to ease from recent highs.