According to BHP they have been able to get a massive 20% increase in the price of coal for this year to USD $56- starting April 2004 ..... still in real terms income is down by 15 % when converted to AUD. Other suppliers have fared worse.
Iron Ore RIO seems to have done the best by getting an increase of 18.6 % to USD 35.99 pet tonne for the year .... some smaller producers seem to have only been able to get increases of around 9%. When converted to AUD the loss in real terms is around 17 %.
All this does is confirm my original post .... market has moved sharply in the opposite direction to actual prices and profit outlook .....
We would need to see AUD/USD under 69 cents to correct this fall in real terms. Since prices are now set for 2004/2005 for coal and iron ore which represents 26 % of mineral exports between them the profit numbers for these producers in coming years will heavily depend on both the current demand and prices staying up and the AUD to correct back down.
Coal and iron ore also represent roughly 14 % of Austalaias total exports ... so a real fall in the income of well over 10% will put a further dent in the current account especially depending on how ell and how far forward our exporters are hedged in the Ozzie. Peversly any worsening in the current account put further upward pressure on interest rates and adds further support to the AUD/USD exchange rate.
