Material Matters: Coal, Base And Precious Metals

A high Australian dollar, a drop in prices, delays in government approvals, a lack of funding options – it’s not a good look for coal, according to Credit Suisse. The broker has re-visited its valuations of the Australian coal sector and cut its outlook for both metallurgical and thermal coal, although the latter’s revisions are more minor. Credit Suisse describes metallurgical coal’s short-term fundamentals as ‘torrid’ and sees only a modest recovery in prices for this coal – perhaps back towards USD190/t by 2015. The broker has cut its price forecasts for metallurgical/coking coal prices by an average 17% in 2013 and 10% in 2014. Others are not so severe. Goldman Sachs still ranks coal amongst its top tier of commodities for equity investment purposes and sees prices recovering going into 2013. The broker expects the production cuts currently in train will be supportive of prices down the track.

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Australian Fund Managers Turn Bullish

According to the latest Russell Investments quarterly survey of Australian investment managers, we should expect a sustainable turnaround in the Australian share market within 12 months. From a sample set of 40 fund managers, Russell found 77% expect the local market to turn around by end-2013 and 63% expect this occur by end-FY13. The survey was conducted last month and we note that the ASX 200 has now broken up through stiff one-year resistance in a steady rally which began in June. The emphasis here is thus on the word "sustainable".

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