CANBERRA: Australia’s export earnings from resources will reach a record 214 billion Australian dollars (US$168 billion) this financial year, according to a report from the nation’s commodity-price forecaster, with LNG demand helping offset lower iron-ore prices resulting from Chinese steel production cuts. Exports of LNG were expected to add A$14 billion to Australia’s export earnings over the next 18 months, the Department of Industry, Innovation and Science said in its latest quarterly commodities report, even though lower coal and iron-ore prices would wipe out A$11 billion and A$10 billion respectively from the country’s resource income. Recent steel production cuts in China led to volatile iron-ore prices, the department’s chief economist Mark Cully said Monday, with the price of Australia’s largest single export forecast to decline over the next two years, to be worth around A$52 billion by mid-2019. Continued moderation in Chinese steel production, coupled with increased supplies from both Australia and Brazil, are expected to weigh further on iron-ore prices,” Mr. Cully said. “Coal prices, both thermal and metallurgical, are also forecast to weigh heavily on Australia’s export earnings in the next two years due to rising global supply and moderating demand.” China last week said it intended to meet a target to cut steel production by up to 150 million metric tons by 2020, despite a recent rally in steel prices, as the country looks to tackle its air-pollution problem. In the lead-up to winter in the Northern Hemisphere, the world’s largest steelmaking country last year trimmed steel capacity by 50 million tons and said it planned to cut another 120 million tons of illicitly produced steel-product capacity, blamed for high pollution levels. The curbs were expected to take its toll on metallurgical coal prices in early 2018, Mr. Cully said, with a rise in spot prices through the December quarter due largely to concerns about supply arising mainly from bottlenecks in the Australian export system. Thermal coal spot prices, he said, were also expected to ease through 2018 and early 2019, as supply rebounded from recent disruptions and demand eased. Australia’s coal exports were forecast to be worth A$44 billion by July 2019, the report said. The Australian economy hasn’t experienced a recession in 26 years–the longest economic expansion by an advanced nation in the modern era, with annual GDP growth of 2.8%. But the country last week recorded surprise back-to-back trade deficits in October and November for the first time in 12 months, largely as a result of record imports. Key coal exports declined by A$98 million, contributing to a A$628 million November deficit. The center-right government in December forecast a deficit of A$23.6 billion in the fiscal year through June–1.3% of GDP–with a return to surplus in 2021. The Industry Department said export volumes would continue to grow at a robust pace over the next two years as a global upswing in economic activity gained strength, driven mainly by LNG as major oil-and-gas developments like Chevron’s Wheatstone and Inpex’s US$37 billion Ichthys project entered production, underpinning growth out to 2019.