Teck Resources Ltd. was upgraded to Buy from Hold by Canaccord Adams analyst Orest Wowkodaw. He also hiked his price target on the stock to $50 from $43 on higher coking coal price assumptions.
Major steelmakers in Japan reportedly agreed to a 55% price increase for this key manufacturing component for the April-June period. They will pay US$200 per metric ton to the BHP Billiton Mitsubishi Alliance, up from US$129 in the current fiscal year.
Canaccord’s new estimates assume benchmark coal year contract prices of US$213/t in 2010 (previously US$165/t), US$200/t in 2011 (previously US$165/t), and US$130/t long-term (previously US$120/t).
“While several operating issues remain a concern (Red Dog permitting, coal production run rate, Andacollo ramp up), the Buy rating is supported by positive near-term coking coal and copper price momentum,” Mr. Wowkodaw told clients.