Metals and Mining: Winners and Losers

NEW YORK (TheStreet) -- Endeavour Silver (EXK), MAG Silver (MVG) and Pan American Silver (PAAS) rallied higher; Peabody Energy (BTU), James River Coal (JRCC) and Alpha Natural Resources (ANR) showed weakness.

Silver stocks accumulated gains past week as global silver prices tested 38-year highs, attributable to higher consumption. Looking ahead, London-based consultancy firm GFMS expects silver prices to touch $50 per ounce in 2011, as demand from investors seeking a safe haven and inflation hedge will push prices higher.

Leading the advancers' list, Endeavour Silver gained 26.9% last week. For the first quarter of 2011, the company reported record 17% increase in silver production to 900,133 ounces, while gold output escalated 33% to 5,008 ounces, compared to the first quarter of 2010. Led by higher production and realized prices, revenues surged 95% to 35.4 million. The company has also reaffirmed that it is on track to achieve its production forecast of 3.7 million ounces silver in 2011.

MAG Silver and Pan American Silver accumulated 22.7% and 15.5% during the past week, respectively, led by higher underlying metal prices. A major portion of the rise in silver prices is attributed to investment demand vis-à-vis industrial demand. This trend is expected to continue, with the probability of lasting through the next decade.

Last week, as silver prices breached the $40 an ounce record price, others silver stocks like Silver Standard Resources ( SSRI) and Silver Wheaton ( SLW) edged 9.8% and 9.5% higher, respectively. Many research firms have recommended SLW and analysts have assigned a near-term target of $54 with an outlook of outperforming the sector.

Among others, Metalline Mining ( MMG) and Mines Management ( MGN) were up 13% and 11.6%, respectively.

As the dollar index slipped to a 15-month low, gold prices soared to record highs of around $1,460 an ounce. As per a Standard Chartered analyst's report, gold prices are seen averaging around $2,100 an ounce by 2014 and even approaching $5,000 later in the decade, driven by robust demand from Asian economies.

Gold stocks like Eldorado Gold ( EGO), Alexco Resource ( AXU), Goldcorp ( GG) and U.S. Gold ( UXG) rose 13.6%, 11.5%, 10.6% and 9.5%, respectively.

Great Northern Iron Ore Properties ( GNI) emerged top loser last week, down 16.7%. Crude oil supply increased by almost two million barrels last week. Peabody Energy and Massey Energy slipped 6.3% and 3.8% during the last week, respectively, affected by higher-than-expected increase in supply. Positively, analysts at Morgan Stanley raised the price target for Peabody to $80 from $79 with an overweight rating.

Similarly, other companies like James River Coal and Alpha Natural Resources shed 5.4% and 5.2% at close last week.

Global steel producers are under pressure as the steel industry is likely to grow at 5% or less annually, over the next five years. As inputs and commodities prices increase, most of the companies are forced to raise their products prices to protect margins and earnings. Although demand is seen soaring, the industry would struggle in light of balancing between steel demand, rising inputs, and ability for companies and countries to afford price increases from producers.

Steel companies like Haynes International ( HAYN), Schnitzer Steel Industries ( SCHN), Mechel ( MTL) and U.S. Steel ( X) lost 4.8%, 3.9%, 3.7% and 2.4% during the past week, respectively.

Coal Stocks International Coal Group ( ICO), Arch Coal ( ACI), and Patriot Coal ( PCX) eroded 3.6%, 2.9% and 2.3% in value, respectively.

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