Steam market has Legg's stamp of approval; analyst wary of met

摘要

Legg Mason is bullish on steam coal, not so hot for coking coal. "Utilities are entering the summer with an unusually low level of coal on the ground, and... power reliability concerns are a possibility if some combination of coal production shortfalls, transportation bottlenecks, and a stretch of hotter-than-normal weather occurs," Legg Mason reported. "Our view is that 1) cyclical risks to steel demand, 2) the potential for a further U.S. dollar rally in 2005 as interest rates rise, and 3) the likelihood of a supply response to metallurgical coal pricing in lower-cost regions of the world such as Australia, argue for a lower multiple on 2006 and 2007 projected earnings for metallurgical coal producers than steam coal producers," Paul Forward, Legg Mason's coal industry analyst, wrote. Legg Mason also likes the fact that demand for steam coal is less cyclical than that for met coal.