Oil, coal push BHP shares to 13-month high
15:39, Monday, 26 February 2001
MELBOURNE, Feb 26 (Reuters) - Shares in BHP Ltd hit a 13-month high on Monday,
propelled over the past two weeks by big coal price increases achieved in talks
with Japanese customers, and oil prices staying in the high US$20s longer than
expected.
BHP shares jumped to a high of A$20.58, heading toward the record high of
A$21.22 touched in January 2000, and at 3:40 p.m. (0440 GMT) were up 1.8
percent or 36 cents at A$20.41, outpacing a 0.62 percent gain in resources
stocks.
Japanese steel trade newsletter Tex Report said last week that coal producers,
led by BHP, had won price increases of about 7.5 percent or US$3 a tonne on
hard coking coal for annual contracts beginning in April 2001.
Analysts said another factor helping the group's share price was a flow of
positive reports stemming from their visit to BHP's Western Australian iron ore
operations late last week.
"There are probably a few projects that can be earnings enhancing for BHP at
minimal cost. And thus far people have underestimated the potential of the iron
ore business," said UBS Warburg analyst Glyn Lawcock.
Analysts said forecasts for BHP's 2001/02 profit would likely have to be
upgraded given that oil prices, key to the performance of BHP's second largest
division, had yet to slip below $25 a barrel, outperforming assumptions in most
brokers' outlooks.
"Everyone has the view that the oil price is going back to $20 next year and
everybody has the view the currency (Australian dollar to U.S. dollar) is going
back to 65 cents -- both of which are out of the money at best at the moment,"
said Morgan Stanley Dean Witter analyst Paul McTaggart.
"One or the other is likely not to come off, which means you get positive
earnings upgrades eventually," he said.
(c) Reuters Limited 2001
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