- Coking coal’s rally towards $300/metric ton most likely will prove short-lived and supply disruption caused by the Queensland floods will be compensated by July, meaning that H2 2017 and 2018 prices should pull back, FBR analyst Lucas Pipes writes.
- Prices most likely will stay elevated in the short-term but longer- to medium-term prices should move lower as high prices would mean more supply, Pipes says, estimating a Q3 benchmark price of $160/ton.
- Met coal-exposed names such as Teck Resources (TECK +0.8%) and Arch Coal (ARCH +1%), who have production outside of Australia, remain muted even as spot coal rallies; Pipes says that for every $20/ton change in benchmark coking coal price, TECK’s Q2 free cash flow would change by ~C$110M and Q2 EPS by C$0.20.
- ETF: KOL
- Source: Bloomberg First Word