The global economic worries have been responsible for JOY Global price worries. Alpha Natural Resource and Walter Energy, recent pessimistic forecast on Coal shipments have upset the market in the last few days.
The focus has shifted to Metallurgical Coal and Iron ore usage, which are crucial in the coal mining market. Metallurgical Coal (Coke) plays a crucial role in the development of iron and steel around the globe. Coke is used to smelt iron ore and other iron bearing materials in blast furnaces, acting as a heat and chemical reducing agent, to produce steel and other hot metals. Approximately 66 % of all steel is manufactured using this method. The recent drop in demand for steel in Asia has been responsible for the lack of demand in coke. Asia’s drop in demand may be a sign of slower growth in this region.
Global prices for iron ore may fall 29 percent to an average $123 a metric ton in 2015 from a record $173 this year, according to the median estimates of 10 analysts surveyed by Bloomberg News. Analyst from Goldman Sachs, are claim that there will be a drop in profitability for all Mining companies.
Despite these worries, Mike Sutherlin, CEO of JOYG, remains optimistic on growth in the International markets. He highlighted the Chinese markets and possibility for expansion In India. However, he did not like the growth prospects for the United States. Right now there is potential upside of 64.0 percent for shares of Joy Global based on the current price of 63.55 and the analysts’ consensus price target of $104.23.
Joy Global closed at 63.81(-6.63,-9.41%).
-Jim
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