Things looking ugly in the US atm. No doubt the rest of the week will be somewhat ugly, but seems to be alot of support for the stock at current levels with minimum volume going through so far. Coal outlook strong should help to stabilize the stock through any bumps and with news flow close.
Also read yesterday that steel growth is set to grow in China by up to 25% in coming years. I have a great article for you all to read to from the SMH aswell regarding coking coal and iron ore. Does talk about another company TRC but the first part of the article is relevant to AKM.
Tigers Realm hunts coking coal market Barry FitzGerald May 30, 2011
YOU can't have a boom in global steel production without an attendant boom in the supply of steel's core ingredients - iron ore and coking coal. For each tonne of steel the average blast furnace consumes 1600 kilograms of iron ore and 600 kilograms of coking coal.
So if high-range expectations for the annual global steel market to grow by a staggering 60 per cent to 2.2 billion tonnes by 2020 prove correct, there first have to be massive increases in iron ore and coking coal production.
Work is under way by the global industry to meet the demand after the global financial crisis hiccup. As Garimpeiro has pointed out previously, the undersupply of iron ore is forecast to move to oversupply around 2014 and stay that way. So, don't expect bumper iron ore prices to last.
It is a different story with coking coal. Due mainly to the Queensland floods this year, coking coal is already in short supply. More to the point, even after the Queensland industry - the world's main supplier - bounces back, coking coal is forecast to remain undersupplied for as long as anyone is prepared to forecast.
Unlike iron ore, there is an absolute scarcity of high-quality coking coal development opportunities. And the much-vaunted new supply in Mongolia and Mozambique first has to overcome major infrastructure shortcomings before having much impact on the shortfall.
It's no surprise then that coking coal prices are expected to remain at super-strong levels for years to come. The current price of $US295 ($A275) a tonne for top quality (premium hard coking coal) gives producers cash margins of more than $US200 a tonne.
Most analysts forecast a retreat in prices to $US225-$US250 in the next three years or so. That would still give most producers cash margins of $US125-$US150 a tonne. So on the basis that the steel production boom in China, India and Brazil is not about to stop, it is coking coal rather than iron ore that provides the safer bet.
Now coals ain't coals. Garimpeiro is talking about the premium end of the coking coal market, not the lower quality end, and certainly not the steaming coal market, which is a different category altogether.
Despite Australia's dominant position in the seaborne coal trade, there is precious little in the way of openings for investors to gain direct exposure, particularly for the premium hard coking coal segment.
See Full article below Read more: http://www.smh.com.au/business/tigers-realm-hunts-coking-coal-market-20110529-1fau6.html#ixzz1O8oVdVW8
Also worth a read MMC aquires new coking coal project http://blogs.wsj.com/exchange/2011/06/01/mmc-stands-for-mongolian-mining-consolidation/?mod=google_news_blog
India Coking coal imports to surge http://www.smh.com.au/business/indian-coking-coal-imports-to-surge-20110530-1fd0w.html
Chinese Coking Coal shortage to be 100m tons by 2015 http://www.steelguru.com/raw_material_news/China_may_face_shortfall_in_coking_coal/207885.html
Gl to all holders and hanging in their!
GB
AKM Price at posting:
73.5¢ Sentiment: LT Buy Disclosure: Held
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