Both Goldman Sachs JBWere and Citigroup highlighted the tightening of the metallurgical coal market caused by resurging demand and restricted supply.

 

Premium coals are showing up the tightest, with semi-hard coals leading the pack with the most supply growth and hard coking coal expected to tighten.

 

Citigroup predicted a rollover in prices next year and a $US20 per tonne increase in 2009-10.

 

“The outlook for PCI benefits from both a tighter thermal coal price (pushing it up from below) and tighter coking coal markets (dragging it from above),” Goldman Sachs JBWere said.

 

Citigroup pointed out both China and India were impacting the market with Chinese imports increasing 30% year on year in March and 13% for the first quarter, whilst India’s imports jumped the same percentage after remaining stable in 2006.

 

Supply constraints have continued to affect supply out of Australia, with 73 vessels waiting off Newcastle and 46 at Dalrymple Bay.

 

Goldman Sachs JBWere also pointed out the strength of the Australian dollar becoming a factor, saying while companies generally lock in expected revenue over the contracted year the potential for negative impacts in future years weighs on sentiment.

 

The brokerage listed Macarthur Coal as its preferred stock; called Centennial “for the brave” but gave a long-term Hold recommendation; and rated Felix a long-term Hold, rating Moolarben as “a potentially very good new project”