NAB Lifted Australian Growth Estimate

Darlington Musarurwa
13 Apr, 2010
New York City

Australian business conditions improve in March according to the private survey by the National Bank of Australia. The bank also lifted its estimate of economic growth to 3.5% from 3%. Coal shipments declined 6% in the last week.

[R]3:00 AM New York, 7:00 PM Sydney – Australian business conditions improve in March according to the private survey by the National Bank of Australia. The bank also lifted its estimate of economic growth to 3.5% from 3%. Coal shipments declined 6% in the last week.[/R]

Australian benchmark index declined 0.7% as investors locked in gains after yesterday’s highs. Sentiment was also affected after the business confidence index in March declined on the expectations of higher rates. However, business conditions improved in the period.

Commodity stocks also tumbled as gold prices decreased 0.7% to $1,153 per ounce and crude oil prices dropped 0.3% to $84.1 per barrel.

In Sydney trading ASX 200 Index fell 0.7% or 32.7 to 4,951.60.

Of the ASX 200 index stocks, 48 gained, 143 fell, and 9 were unchanged. Charter Hall Group led gainers in the index shares with a rise of 3.6%.

The Australian dollar plunged 0.2% to 92.51 U.S. cents.

Australian Business Conditions Improve

National Australia Bank reported today that the country’s business conditions index gained 5 points to +13 points in March from the previous month, notwithstanding the rising interest rates which negatively impacted on business confidence.

The report noted employment demand has improved and unemployment is estimated to drop 4.5% by the end of 2011.

However, business confidence decreased 3 points to +16 points in the review period as interest rate hikes affected rate sensitive sector like manufacturing. Reserve Bank of Australia has increased rates five times since October 2009.

According to the survey capacity utilization increased to 82.1% in March from 80.7% a month ago.

NAB estimates the official cash rate target of 5.25% at the end of 2010, while inflation is expected to end 2010 at 2.5%.

Economic growth estimate was lifted higher to 3.5% for the year from the previous estimate of 3%.

Coal Shipments Fall 6%

Newcastle Port Corp. reported that coal shipments from Australia’s Newcastle port dropped 6% to 1.9 million metric tons in the week ending April 12 from 2.1 million tons a week earlier.

Vessels waiting to load 4.3 million tons of coal rose to 51 from 46 a week ago.

In addition, coal ships waited to load coal for 17.45 days from 20.08 days a week earlier.

Mineral Deposits to Spin Off Grande Cote Project

Mineral Deposits announced today that it intends to spin off its Grande Cote mineral sands project in Senegal through an initial public offering estimated to be worth A$300 million.

Chief financial officer Rick Sharp said it will seek to raise 50% of the project’s cost through the offering in the second half of the year.

Mineral’s board has since advised management to appoint advisers. Construction of the project is expected to take two years, before first production in 2013.

ASX Movers

Karoon Gas Australia Ltd led decliners in the S&P ASX 200 index with a loss of 9.4% followed by losses in Energy Resources of Australia Ltd of 5.8%, in Alumina Limited of 5.5%, in Eastern Star Gas Limited 4.8% and in Centennial Coal Company Limited 4.7%.

Charter Hall Group led gainers in the S&P ASX 200 index with a rise of 3.5% followed by gains in IRESS Market Technology Limited 3.4%, in Energy World Corporation Limited of 3.0% and in Primary Health Care Limited of 2.4%.

Other Movers

Alumina Limited decreased 5.8% to A$1.77 after the company engaged in investing in bauxite mining said Tuesday that alumina prices are driven higher by strong Chinese demand but that costs are also on the rise.

BHP Billiton plc the mining company fell 1.4% to A$43.80.

Energy Resources of Australia Ltd decreased 5.7% to A$18.55 on the weak uranium price outlook.

Galaxy Resources Limited surged 9.4% to A$1.34 after the mineral explorer executed agreements with thirteen major Chinese lithium cathode producers for the sale of its battery grade lithium carbonate product.

Iluka Resources Limited slipped 4.0% to A$4.78 after the miner said 2009 revenues fell 37% to A$586.0 million from A$926.1 million a year ago. Net loss for the year was A$108.6 million or 26.8 cents per diluted share compared to net profit of A$77.5 million or 22.4 per share a year ago.

Rio Tinto Limited dropped 1.6% to A$79.40 after the miner said a water shortage won''t affect production at its Alcan aluminum smelters in Canada.