It is not only Australia that has been negatively affected by the slowdown in the Chinese economy which resulted in a drop in iron ore prices in the world market.
India, the world's third-largest supplier of iron ore, also experienced a more than 40 per cent drop in iron ore exports for the June quarter, Bloomberg reports.
For the first quarter of the fiscal year, iron ore exports plummeted to 12.11 million tonnes worth 52.36 billion rupees, data from the Ministry of Finance said. In comparison to the previous quarter, India exported 57.35 million tonnes of iron ore.
The report also blamed the 30 per cent export duty imposed by the Indian government which made iron ore from the Asian giant less attractive compared with those from Brazil or Australia. As a result, Indian miners were selling the commodity at low profits or loss as prices went down 36 per cent to less than $90 a tonne.
Due to the continuous fall of commodity prices, Australia logged its seventh consecutive trade deficit in July to $556 million from $227 million in June, according to the Australian Bureau of Statistics.
Reports said that Aussie exports dipped 3 per cent from June, imports went down by 1 per cent and the value of metal-ore and minerals exports went down 3 per cent.
Experts said the continuous decline in iron ore would also create a large hole in Australia's economic which expected just a small budget surplus based on a $150 per tonne price of iron ore price in the international market when the federal budget was made in April.
The budget surplus was also promised on China expanding at 8.5 per cent for 2012, down actually Beijing's 9.2 per cent growth rate in 2011.
On Wednesday, iron ore price on the spot market plummeted by 41 per cent to a three-year record-low of $86.70 per tonne.
"The period of super-sized trade surpluses driven by rising export values has well and truly passed. The recent performance of spot commodity prices like iron ore suggests any return to those surpluses remains some way off," The Australian quoted Deutsche Bank chief economist Adam Boyton.
TD Securities head of Asia-Pacific Research Annette Beacher, in a note to clients, said that due to the fact the imports would likely remain elevated because of high resource investment there is little chance for a return to a budget surplus until 2013. She said for the rest of 2012, trade balance would likely be stuck in deficit and net exports would drag Australia's gross domestic product growth rate.