Met Coal, Iron Ore Prices to Rise in FY13 as Supplies Remain Tight - Analyst (ACI) (ANR) (CNX)

December 5, 2012 9:28 AM EST Send to a Friend
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Coal and iron ore producers could see some upside in 2013, according to an outlook from RBC

Analyst Chris Drew sees prices for iron ore and metallurgical coal (met coal) rising next year, with thermal coal seeing a limited upside on a few factors.

On iron ore, Drew says inventories at Chinese steel mills will be low and supplies in China, Brazil, and Australia will also be down, with the latter two being affected by recent weather conditions. He also noted that Indian exports are "unlikely" to have a near-term bounce back.

For FY13, Drew sees iron ore at $125 per metric ton, moving to $105 per metric ton in FY14.

Met coal prices should be around $190 per metric ton in 2013, Drew estimates.

Drew notes that thermal coal will be limited by improving met coal metrics, lower U.S. gas prices, and higher freight rates.

In September, coal and steel prices were sinking as the slowdown in the Chinese economy began to take its toll. Patriot Coal (OTCBB: PCXCQ) went belly-up, with many peers trading at or near annual lows.

Traders will be watching names like Alpha Natural Resources (NYSE: ANR), James River (Nasdaq: JRCC), CONSOL Energy (NYSE: CNX), Arch Coal (NYSE: ACI), Vale SA (NYSE: VALE), Peabody (NYSE: BTU), ArcelorMittal (NYSE: MT), BHP Billiton (NYSE: BHP), Rio Tinto (NYSE: RIO), and Cliffs Natural (NYSE: CLF) for any signs of rebound into next year.


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