Monday April 20, 2015, 3:50pm PDT
By Teresa Matich+ - Exclusive to Coal Investing News
The first quarter of 2015 didn’t bring much relief for the coal price or coal companies, and now that we’re well into the second quarter of the year, the situation isn’t looking much better.
Firms such as Morgan Stanley (NYSE:MS) have lowered their price forecasts for both thermal and metallurgical coal, while steel demand from China continues to cool. Furthermore, this month Rio Tinto (ASX:RIO,LSE:RIO,NYSE:RIO) lowered the price for this year’s benchmark thermal contract with Japan, a key price reference for other contracts in the region. Similarly, Glencore (LSE:GLEN) is selling coal to Japan at the lowest price in six years.
That said, looking back at Q1, there were one or two bright spots, such as Glencore’s announcement that it could cut 15 million metric tons (MT) of production. However, the overall mood remains gloomy, and coal investors will be waiting to see whether improved thermal coal demand from India or China can help abate some of the oversupply in the space.
Here’s a round-up of some of the top stories from Coal Investing News during the last quarter.
1. Haywood Sees Met Coal Prices Averaging $125 in 2015
Haywood Securities joined a number of other firms in bringing down its price forecast for metallurgical coal for the year. In a report released in late January, the firm lowered its price prediction for metallurgical coal to US$125 per MT for 2015 from $130. The spot price of Queensland hard coking coal is currently sitting at about US$112 per MT, or $109 per MT for quarterly contracts. Click here to read the full article.
2. Will Teck Resources Bounce Back?
The share price of Canadian coal producer Teck Resources (TSX:TCK.B) started to creep upwards in early February, and the move had some market watchers wondering whether a rebound was in the cards for the company. The miner gained nearly 40 percent between mid-December and February, and some analysts suggested that factors such as a weaker Canadian dollar could continue to help the company’s bottom line. Teck’s share price has dipped about 10 percent since then, to $16.70, but the company is still up just over 5 percent since the start of the year. Click here to read the full article.
3. Morgan Stanley Coal Price Outlook
Near the end of the quarter, Morgan Stanley put out its latest Global Metals Playbook, recording decreased price predictions for a number of metals and commodities, including both thermal and metallurgical coal. In the report the firm notes a lack of pick up in seasonal demand for coal in China, meaning that coal and base metals are missing that key support. Click here to read the full article.
4. Jonny Sultoon Talks Coal Price and Coal Market Outlook at PDAC 2015
At this year’s PDAC conference, Resource Investing News had the chance to speak with Jonny Sultoon, research director for global coal markets at Wood Mackenzie, about what’s been going on with the coal market. Sultoon spoke about everything from carbon capture technologies to demand from China and the potential impact of increased steel recycling on the metallurgical coal market. Overall, he sees the metallurgical coal price hitting $116 per MT by the end of the year, with the Newcastle thermal coal price averaging $62 to $64 per MT. Click here to watch the full video interview.
5. EY: Coal M&A to Accelerate in 2015
In its report on mergers, acquisitions and capital raising in mining and metals, EY notes that there could actually be opportunity in the coal space at the moment — for those with financial means. While the firm doesn’t deny that 2014 was a tough year for coal and other commodities, it also states that the current market could be “a boon for opportunistic acquirers.” Click here to read the full article.