Easter petrol price hike; Used car prices lift
Record resources & energy exports
Petrol Prices; Used vehicle market; Resources & energy exports
Fuel prices: Last week the national average price of unleaded petrol fell by 0.6 cents a litre to 137.9 cents per litre (c/l) according to the Australian Institute of Petroleum. But retail unleaded pump prices are entering the price hike cycle in Brisbane, Sydney and Melbourne ahead of the Easter holiday weekend.
Used car prices: Used vehicle prices rose by 1.6 per cent last week with supply down 2.3 per cent.
Resources & energy exports: The Department of Industry, Science, Energy and Resources released the Resources & Energy Quarterly for March. According to the Chief Economist, “Australia’s resource and energy exports are forecast to hit a record $296 billion in 2020–21, a strong result, in the context of the COVID-19 pandemic. A modest decline to $288 billion (in real terms) is likely in 2021–22, at which point earnings stabilise over the remainder of the outlook period.”
Movements in the petrol price can affect consumer spending, and in turn, prospects for retailers. Used car price data is useful in gauging activity levels in the motor vehicle market.
What does it all mean?
• Sydneysiders about to hit the road for the Easter long weekend should fill up their tanks now. While the average retail unleaded petrol price is 133.5 cents a litre today (source: MotorMouth), the discounting cycle – now three weeks old – is about to come to an abrupt end. In fact, servos could hike pump prices to at least 165 cents a litre this week – levels last seen on December 14, 2019.
• Melbourne retail unleaded petrol prices are averaging 138.2 cents a litre today after bottoming at 133.8 cents a litre on Friday (source: MotorMouth). Drivers should fill up their cars over the next couple of days or risk paying through the nose over the Easter holiday weekend. Already fuel prices are above 140 cents a litre in Melbourne’s inner Eastern suburbs and St Kilda.
• The petrol price pain is most acute in soon-to-be locked down Brisbane. Today, MotorMouth records the average retail unleaded pump price at 161.5 cents a litre – the highest level since February 17, 2020. Prices have already hit 169.9 cents a litre across the city, so motorists should top up rather than fill up their fuel tanks. But if motorists consult fuel apps, pump prices are still below 124.9 cents a litre in a few suburbs: Wynnum Road, Tingalpa; Sandgate Road, Nundah; Blunder Road, Oxley; and Orange Grove Road, Coopers Plains.
• Used car prices rose 1.6 per cent last week with finance company or repossessed vehicle prices surging 6.2 per cent. Stock remains low with the market tightening a further 2.3 per cent last week. Prices of in-demand recreational 4×4 utes – the Holden Colorado (up 3.7 per cent) and the Mitsubishi Triton (up 2.7 per cent) – lifted most along with the Toyota Hiace (up 3.3 per cent) delivery van.
What do you need to know?
Weekly petrol prices
• Last week the national average price of unleaded petrol fell by 0.6 cents a litre to 137.9 cents per litre (c/l) according to the Australian Institute of Petroleum. Metropolitan prices fell by 1.3 cents to 137.9 c/l, but regional prices rose by 1.1 cents to 138.0 c/l.
• Average unleaded petrol prices across states and territories over the past week were: Sydney (-4.9 cents to 135.6 c/l), Melbourne (-5.5 cents to 134.9 c/l), Brisbane (+15.6 cents to 146.9 c/l), Adelaide (-21.0 cents to 130.3 c/l), Perth (+1.0 cent to 139.4 c/l), Darwin (+4.2 cents to 138.1 c/l), Canberra (+1.1 cents to 140.1 c/l) and Hobart (+1.5 cents to 142.0 c/l).
• The smoothed gross retail margin (2-month rolling average) for unleaded petrol fell from 15.89 cents per litre to a 12-month low of 14.64 cents a litre (24-month average: 15.59 cents a litre).
• The national average diesel petrol price rose by 0.7 cents to 134.8 cents a litre over the past week. The metropolitan price lifted 0.5 cents to 133.7 cents a litre and the regional price was up 1.0 cent to 135.8 cents a litre.
• Last week, the national average unleaded Terminal Gate Price (TGP) was down by 0.9 cents to 125.5 cents a litre. The terminal gate diesel price fell by 1.8 cents to 121.3 cents a litre.
• Today, the average unleaded TGP stands at 123.7 cents a litre, down by 3.6 cents over the week. And the terminal gate diesel price is down by 3.8 cents to 119.2 cents a litre from a week ago.
• MotorMouth records the following average retail prices for unleaded fuel in capital cities today: Sydney 133.5c/l; Melbourne 138.2c/l; Brisbane 161.5c/l; Adelaide 139.2c/l; Perth 128.0c/l; Hobart 142.1c/l; Darwin 139.7c/l; and Canberra 140.3c/l.
• Last week the key Singapore gasoline price rose by US10 cents or 0.1 per cent to US$71.45 a barrel. In Australian dollar terms, the Singapore gasoline price lifted $1.82 or 2.0 per cent to $93.85 a barrel or 59.03 cents a litre.
Weekly used vehicle market
• Datium Insights have reported the following results for the week to March 29:
“Prices increased last week (+1.6 per cent) with repossessions (+6.2 per cent) leading increases
Supply fell (-2.3 per cent) as stock continues to tighten in the market
Clearance rates were up (+1.1 per cent)
Prices for the top 15 traded vehicles were mostly positive with the Holden Colorado seeing the greatest increases (+3.7 per cent)
Stock still remains considerably low.”
Resources & Energy Quarterly – March
• The Department of Industry, Science, Energy and Resources issued the Resources & Energy Quarterly for the March quarter, 2021.
• According to the Chief Economist, “In the March quarter 2021, the Office of the Chief Economist’s (OCE) Resources and Energy Export Values Index rose 11.8 per cent from March quarter 2020; a 1.8 per cent rise in prices added to a 10 per cent gain in volumes. In the outlook period, exports are forecast at a record $296 billion in 2020/21 (up slightly in real terms from 2019/20) and $288 billion in 2021/22, where they will broadly stay over the rest of the outlook period. With volumes growing modestly, price swings will determine much of the change in earnings. These price swings seem likely to be much less sharp than in the past seven years.”
What is the importance of the economic data?
• Weekly petrol prices data are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum (AIP). National average retail prices are calculated as the weighted average of each State/Territory metropolitan and non-metropolitan retail petrol prices, with the weights based on the number of registered petrol vehicles in each of these regions. AIP data for retail petrol prices is based on available market data supplied by MotorMouth.
• Data analytics firm, Datium Insights, provides a weekly report on the used vehicle market. Datium Insights and Moody’s Analytics also issue a monthly reading on used vehicle prices. The data assists in gauging the strength of a key component of consumer spending and provides insights on the Autos and components sector of the sharemarket.
What are the implications for investors?
• Aussie East Coast motorists remain captive to retail fuel cycles, but movements in international crude oil prices are also a key influence on pump prices with Australia a net importer of refined petroleum products. Crude prices were incredibly volatile last week, reflecting tensions between slower demand growth expectations in Europe and Asia amid renewed Covid-19 lockdowns and concerns over crude supply due to the Suez Canal shipping vessel blockage. Analysts estimate that almost 1 million barrels per day of crude oil is being impacted by the disruption with the cost of shipping crude increasing as vessels take the costlier route around Africa. But all eyes will be on OPEC and its allies when they meet on April 1 with commodity strategists expecting no change in crude production in May.
• Today, Treasury Wine Estates announced that Chinese authorities would apply a 175.6 per cent anti-dumping and countervailing duty rate on Aussie wine imports over the next five years. Political tensions between Australia and its largest trading partner have seen China apply a range of import duties, tariffs, anti-dumping measures and a ‘black-listing’ of a number of exports, including wine, barley, beef, lamb, cotton, lobsters, timber and coal.
• That said, the Australia’s broader resources and energy exports are forecast by the Department of Industry, Science, Energy & Resources to hit a record-high $295.98 billion in 2020/21. China’s strong construction and manufacturing-led economic recovery is tipped to drive the value of Aussie iron ore exports to an all-time high of $136.31 billion in 2020/21. But it’s not only iron ore driving Aussie resources earnings higher with the value of gold exports estimated at a record $29.06 billion in 2020/21. And export income from late-cycle commodities’ copper, nickel and lithium – all battery and electric vehicle related minerals – are expected to grow strongly over the next five years as demand for thermal coal declines. In fact, copper export earnings are forecast to grow 7.4 per cent on average over the next five years to $17.37 billion by 2025/26.
Published by Ryan Felsman, Senior Economist, CommSec