Merrill Lynch downgrades coal markets, Aussie coal players

CHANGES in the coal market conditions resulting from the world economic downturn have caused analysts from Wall Street bank Merrill Lynch to alter forecasts and pick and choose the Aussie coal producers most affected.
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Felix Resources' Ashton project.

Blair Price

Reported by Dow Jones Newswires, Merrill analysts have downgraded the 2009 coking coal price forecast by 58% and also downgraded thermal coal by 38% as a result of slowing steel production and weaker demand for power generation.

Gloucester Coal and Macarthur Coal were both given new “underperform” ratings by the analysts.

Merrill reportedly said Gloucester was at risk of significant price falls and volume drops from steel mills while Macarthur was the most exposed to coking coal prices and volumes.

Takeover target Felix Resources was Merrill’s prime pick of Australia’s coal sector.

Rumours have been rife that Chinese giant Yanzhou Coal Mining will buy the coal producer, sending Felix’s stock soaring over the past few days.

Having closed at a low of $4.88 for last week on Tuesday, Felix shares closed yesterday at $8.17, some 67% higher. Felix was trading at $8.06 mid-morning today.

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