Macarthur coal profit affected by soaring dollar

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%.