Australian coal miner Macarthur Coal has reported a 63 per cent fall in first-half profits on lower coal prices.
Net profits fell to $39.6 million for the six months ended December 31, down from $106.9m a year earlier. However, the profit was within analyst guidelines of $37-42 million. The company said that weaker coal prices knocked $180.7m off the bottom line, offsetting higher production volume and lower costs.
Chief Executive Nicole Hollows told analysts that she is optimistic about contract coal prices, with Chinese demand set to drive prices higher.
Some of the major producers such as BHP Billiton are trying to move to quarterly pricing, although steel makers in Japan are said to be resisting the idea preferring to remain with annual contracts.
"We understand that the pricing that has been tabled in Japan is above US$200 a (metric) ton and is similar to where the spot price currently is into China and India," she told analysts.
Macarthur's pulverized coal is usually sold at a discount of between 20% and 30% to contract coking coal prices but Ms Hollows is hopeful that market conditions might allow Macarthur to reduce that discount this year.
Ms Hollows said about 28% of Macarthur's sales in the first half were to China but that there were no long-term contracts in place and that all these sales had been at spot price.
Macarthur owns two coal mines in Queensland’s Bowen Basin and Ms Hollows said the company is on track to produce 5 million tonnes of coal this year.
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