Winners and losers in Asia as commodity price super cycle ends

Who could be the next big player?

According to Deutsche Bank's Special Report on commodity supercycle, most Asian economies are importers of energy, with Australia, Malaysia, and Indonesia three notable exceptions, but all are likely to be profoundly impacted by shale related developments.

For a country like India, which spends nearly 40% of its total import bill on coal and oil, and runs a large current account deficit, energy price stability or decline would bring significant dividends in terms of external stability and domestic disinflationary dynamic.

Here's more from Deutsche Bank's report:

For Japan, lower energy pricing, combined with access to cheaper LNG imports from the US, could provide a significant boost for an economy that was left increasingly exposed to energy costs following the Fukushima disaster (as imported power fuel has been used to offset the loss of nuclear power).

Australia could soon be the next big player in the shale complex. The Arckaringa Basin surrounding Coober Pedy is estimated to contain billions of barrels of oil, with the upper end of estimates (230bn barrels) amounting to several times the total stock of oil in the country.

Even if the estimates prove to be half right, Australia would switch from being an oil importer to oil exporter. The LNG industry players in Australia and Indonesia, having invested heavily in recent years with Asia’s seemingly insatiable demand in mind, are looking at the shale developments nervously, however.

If global natural gas prices correct with US exports, that would be a negative for the LNG industry, not just in Australia and Indonesia, but to the massive producers in the middle-east. Australia and Indonesia have thrived in recent years on the back of soaring coal exports, with coal making up about an average of 15% and 14% of total exports, respectively.