International coal prices have rebounded lately after hitting record lows during 1Q2016, said market analysts at JS Brokerage Research Thursday. The per ton price of coal on Richards Bay index, a widely followed benchmark, has shot up by nine percent MTD to trade near $60. "We believe this increase was driven by reversal in crude oil prices, mining output cuts in China and USA and improving demand from developing countries," said Faizan Ahmed of JS Research.
Even after recent cuts in supply, the analyst believes the price hike would prove to be temporary given a weak demand outlook of China due to environmental concerns. "We keep our estimates intact for the time being and wait for commodities markets to normalise," he said, adding that "We have already assumed conservative coal prices of $58/ton (average) for FY17." "Our sensitivity analysis suggests an EPS impact of 2.5-3.5 percent across JS Cement Universe for every $5/ton change in coal price," Ahmed said.
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