Credit Suisse has upgraded its outlook for thermal coal prices as the market has started to show signs of improvement. The bounce back to the high US$50/t potentially suggests the worst might be behind the market.
On the supply side swing tonnage has exited the market in several countries enabling the price to find a bottom. The broker’s long-term price of US$75/t is based on a view that current prices are unlikely to be sustained as opposed to a strong conviction on the demand side. Neutral rating and $1.40 target retained.
Target price is $1.40.Current Price is $1.29. Difference: $0.11 – (brackets indicate current price is over target). If NHC meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges – negative figures indicate an expected loss).