Time to BAIL OUT!!!Lower US coal prices ahead, supplies weigh-analyst
HOUSTON, March 27 (Reuters) - A leading coal industryanalyst Friday cut his 2009 price expectations for U.S. coal $5to $10 a short ton, blaming persistent over-production.
Paul Forward of Stifel Nicolaus & Co cut 2009 projectionsfor unsold Central Appalachian power-plant coal to $55 a shortton from $64 and steel-making coal to $75/$85 from $90/$115.
"Despite announced production cuts, coal productioncontinues to outpace demand, and weaker pricing has been theresult," Forward wrote in a report.
The current price environment will result in coal minerearnings about 25 percent below consensus estimates for 2009and 35 percent below expectations for 2010, Forward said.
"We expect that a backdrop of recovering world oil pricesor domestic natural gas prices throughout 2009 would propelcoal mining firms higher," he wrote.
"But we believe some caution is warranted in a period ofsignificant excess production of coal."
Forward also cut expectations for Australian power-plantcoal to $72 per tonne from $83 and Australian metallurgicalcoal to $120 from $130.
He cut projections for Illinois Basin power-plant coal to$48 from $55 a short ton, Western Bituminous to $45 from $50and the best Powder River Basin grade to $11.50 from $1.50.(Reporting by Bruce Nichols; Editing by Lisa Shumaker)