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.
Aluminum rose on Tuesday, helped by a weakening dollar and a sharp fall in inventories available on the London Metal Exchange (LME), but rising covid-19 cases in China and expectations of surplus supply next year limited gains.
Benchmark aluminum on the LME was up 0.6% at $2,376 a tonne at 1700 GMT after 32,950 tonnes were earmarked for delivery out of LME-registered warehouses, lowering on-warrant stocks to 237,650 tonnes.
[Click here for interactive aluminum price chart]
LME aluminum inventories have been falling in recent weeks and stocks in Shanghai Futures Exchange warehouses, at 92,373 tonnes, are near multi-year lows.
Yet prices of the metal used in transport, construction and packaging have declined in December and are down 15% this year due to a global economic slowdown.
“Demand is weakening, especially in China,” said Citi analyst Wenyu Yao, predicting further price falls.
Citi expects the 65-70 million tonne a year market to be oversupplied by 900,000 tonnes next year, she said.
In China, the biggest metals consumer, cities scrambled to install hospital beds amid a surge in covid-19 cases that will likely disrupt economic activity, and stock markets fell.
The US dollar weakened, however, helping dollar-priced metals by making them cheaper for buyers with other currencies.
LME nickel rose 3.6% to $28,200 a tonne in volatile trading, with traders and analysts blaming low liquidity.
“We see nickel prices declining to $26,000 a tonne over the next three months and falling even further to $22,000 tonnes by the end of 2023,” said Citi analyst Tom Mulqueen, predicting hefty surpluses for 2023 and 2024.
However, Bloomberg reported on Tuesday that Russia’s Norisk Nickel, the biggest producer of refined nickel, is considering reducing output by 10% next year, which could support prices.
LME copper was up 0.5% at $8,358 a tonne, zinc was up 2.2% at $3,078, lead rose 1.2% to $2,185 and tin was 2.9% higher at $23,980.
(By Peter Hobson, Siyi Liu and Dominique Patton; Editing by Kirsten Donovan and Alexander Smith)
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