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Strategies & Market Trends : Can you beat 50% per month? -- Ignore unavailable to you. Want to Upgrade?

To: Peter V who wrote (13678)	4/4/2008 1:02:57 PM
From: Smiling Bob	Respond to of 19257

This is probably a reason behind coal producers' moves I'm not a miner guy. Only got in for the trade and missed this time. == Coking coal prices could hit US$300, says UBS analyst Posted: April 03, 2008, 12:59 PM by Zena Olijnyk Mining UBS analyst Peter Galloway says the already high price of coking coal could go well beyond his forecasts, with positive implications for Xstrata Plc, BHP Billiton Ltd., Anglo American Plc and Rio Tinto Plc. In a note to clients, Mr. Galloway says that comments in the trade press indicate that supply deals for hard coking coal, and even some semi-hard varieties, are taking place at US$300/tonne. That’s well above his forecasted price of US$225/tonne for the 2008 contract year that started April 1, a figure that is already higher than consensus estimates. The reason why the prices are skyrocketing, he says, relates to production issues in Australia and continued strong demand from the steel industry, especially in India and Brazil, both which are totally reliant in imported coking coals. Mr. Galloway points out that these are not yet “benchmark settlements,” but also notes that the prices are supported by comments from ArcelorMittal at a recent investor day in New York, where management spoke of their expectations of a 200% year-over-year increase in coking coal (from US$95 in 2007). The analyst has run models using the US$300 price on Xstrata, Anglo and Rio - he’s restricted on BHP - and estimates prices at this level would lead to earnings-per-share increases of 3%, 4% and 2%, respectively, for these companies in 2008. His top pick would be Xstrata, which is trading at a price-earnigs multiple of 7 times his estimates for 2009. However, Mr. Galloway expects some relief in 2009, forecasting a return to normal production in Queensland in 2009 and a contract price of US $165. Zena Olijnyk