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In a note to clients, Macquarie referenced US Energy Information Administration statistics showing a 5.7% drop in US coal production year-to-date, and said the weaker production 鈥� along with quarrying and construction activity 鈥� had put North America鈥檚 ammonium nitrate market into oversupply.
On a positive note, the bank said there had been a 10-15% increase in prices for initiating systems in the region, a major revenue source for Dyno.
Macquarie views Dyno as well placed to recover from an improvement in quarrying activity in North America and has consequently put an outperform rating on Incitec.
For Orica, the bank kept a neutral rating, but noted the company was continuing to perform well from its thermal coal, copper and gold mining customers.
Macquarie also expects improving Australasian ammonium nitrate prices for Orica as contracts rollover.
