According to Macarthur Coal, thanks to the soaring of Australian dollar and a slump in export prices, its first-half profits will be just one third of last year.

Based on the forecast of the Queensland supplier of steel mills and
coal yesterday, profits will be ranging from $30 million to $38 million
for the first half of the 2009-10 financial years, which shows an
obvious gap from the $106.9 million it generated a year earlier.

Due to a much lower global demand hefty price cuts were inflicted upon
Australian suppliers last financial year after the Japanese steel mills
which resulted in the pit fall in profits.

As stated by Nicole Hollows, the chief executive of Macarthur, because
of port and rail bottlenecks in Queensland’s Goonyella coal chain, the
company is not able to provide full-year guidance.

Though it seems that infrastructure is always a target to be blamed by
companies for poor results, some analysts had pointed out that the
return of queues at key ports might serve its purpose in the coal
producers’ favour since it limits supply while at the same time pushing
up prices.

With contributing factors such as the growing imports of coal from
India and China, it would most likely that the port and rail
bottlenecks in Canada, South America and Australia would be able to
afford higher prices, predicted Alan Heap, an analyst at Citigroup.

Mr Heap foresees through a research that in year 2010, the contract
price for thermal coal would hit $US80 per tonne whereas coking coal
prices could rise up to $US200 per tonne, from the initial prices of
$US70 per tonne and US125 per tonnes, respectively.

With that, Macarthur’s shares dropped to $9.70 with a fall of 4.7%.

Source: IB Times

meet the supply is not there.

Source: Economic Times India

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