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Gold/Mining/Energy : Mining News of Note -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (66563)	8/30/2010 4:40:13 PM
From: LoneClone	Read Replies (1) \| Respond to of 193918

Corporate profits make record leap as coal, iron ore pricing fires mining sector August 30th, 2010 australianbusinessjournal.com.au A Booming mining sector helped Australian corporate profits rise by a record 18.9 per cent in the second quarter. The result highlights the transforming effect that surging coal and iron prices will have on the economy well into the future, and underlines how Australia will grow even as major economies battle stiffening headwinds. Company profits rose by record levels to a seasonally adjusted $68.46 billion in the second quarter from the first quarter, the Australian Bureau of Statistics said today. Economists expected a 6.7 per cent rise. Mining profits rose 62.7 per cent in the quarter, reflecting higher contracted prices for iron ore and coal ¬- which became effective in April – with Asian steelmakers and energy providers. But tainting the stellar profit result was news of a fall in inventories in the quarter that may limit any upward revision of economic growth forecasts for the second quarter. The value of inventories held by companies fell 0.5 per cent in the second quarter to a seasonally adjusted $136.9bn. Economists had expected a 0.4 per cent rise. Some economists trimmed their growth forecasts slightly after the data, citing drag from the unexpectedly fast rundown in stocks for the shift. Second-quarter economic growth data will be published at 0130 GMT on Wednesday. Economists are expecting growth of around 1 per cent from the first quarter. While the quarterly rise in profits won’t be sustained in future quarters, miners can still look forward to ongoing strength in prices and demand from Asia, especially China, which continues to expand solidly, helping to lift Australia’s terms of trade to 60-year highs. Said Justin Smirk, acting chief economist at St George Bank: “Today’s (profit) numbers suggest that, whatever your base case for GDP, the risk is now to the upside of that. We could get a higher rounding up of GDP.” The construction sector also added to the strong profit results with a 30.2 per cent seasonally-adjusted boost to the bottom line in the second quarter. Economic stimulus spending on schools and housing helped the result, with a solid pipeline of infrastructure spending also lifting builders. Elsewhere, the financial and insurance services sectors posted a profit gain of 28.9 per cent, rounding out a solid quarter for corporate Australia. Earlier today, the news wasn’t as upbeat as new home sales fell for the third month in succession. Sales fell 7 per cent in July from June, giving further confirmation that higher interest rates are eroding demand in the sector, the Housing Industry Association said. Sales were down by 8 per cent over the three months to July to be 2 per cent lower when compared to the same period in 2009, it said in a statement. The housing sector has been in an appreciable slowdown for some months now with finance, new approvals and house prices soft. Economists say interest rate increases since late 2009 are the reason for the weakness, with the Reserve Bank of Australia set to remain on the policy sidelines for now. “The slide in new home sales validates interest rates remaining on hold for the rest of the year,” said Craig James, chief economist at Commonwealth Securities. Financial markets were pricing in a small chance of a rate cut at next week’s RBA policy meeting.