Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Gold’s looks like it’s limping to the finish line with a $100 decline from it’s 2017 high hit three months ago, but bullion bulls would probably feel happy about a second year of near double digit gains (provided the last fortnight of 2017 has no surprises in store).
Silver’s been a real disappointment this year with the precious metal failing to capitalize on the fact half of demand is from industry and a good chunk of that from green energy.
Platinum and palladium has gone in opposite directions with the latter up by more than 50% this year, stretching the gap with its sister metal to the widest in 16 years. This helps to explain why platinum is the pick among forecasters for an improvement next year, while palladium is likely to retreat from today’s lofty levels.
Copper suffered its worst one day fall in nearly three years last week, but has been in recovery mode since then; and back to within shouting distance of levels last seen in 2014
Base metals – with the notable exception of tin, down 10% year to date – have enjoyed a good year. Cobalt is up 120% this year to nine year highs (not included in the graph because who knows where it’s going), while lead and zinc both added more than 25% in value this year building on spectacular performances in 2016. Nickel emerged from a mid-year slump and now looks set to end 2017 with double-digit gains which forecasters believe the steelmaking and battery material will hold onto over the next two years.
Bellwether copper suffered its worst one day fall in nearly three years last week, but has been in recovery mode since then adding more than 2% on Friday to $3.14 a pound and back to within shouting distance of levels last seen at the beginning of 2014.
Perennial underperformer uranium – together with potash the only major mined commodity to lose value in 2016 – is also predicted to show further gains in 2018 and 2019 after a 20% jump so far this year.
Iron ore and coking coal prices are finishing strong with the steelmaking raw materials enjoying a much better 2017 than was forecast earlier in the year. Coking coal jumped to seven month high of $240 a tonne on Friday, while iron ore was back above $70 a tonne against expectations of a return to the $50s. Forecasters are sticking to their bearish projections however with sharp falls expected over the course of next year.
The graph below is a breakdown of forecasts and divergence from the spot price for selected metals and minerals for the fourth quarter 2018 and 2019 according to consensus forecasts from investment banks, institutions and research houses compiled by FocusEconomics, a company based in Barcelona.
3 Comments
Brad Lavallee
Your headline is totally different from your story. You say in headline that metals will fall back but when you read your story you say metals will continue double digit gains. One way or the other Frik
King Blonde
As I said here few weeks ago: it’s time to short in mining companies.
Dennis
and what are the reasons behind this “doom and gloom” essay? Some words on WHY would be appreciated. As the other two gentlemen pointed out, falling seems to be a relative direction.