Last week, a major consolidation lifted lithium stocks. ASX listed Orocobre Limited (ASX: ORE / A$2.30B MCAP) and Galaxy Resources (ASX: GXY / $1.95B MCAP) entered into an agreement to merge, and form the fifth largest lithium company by MCAP. We expect further consolidation in the space and believe that advanced juniors in attractive mining jurisdictions will be likely targets.
Among mainstream metals, copper was the best performer, as inventory levels declined for the first time in several weeks. Valuations of gold producers were up 1% WoW, while that of base metal producers remained flat.
Highly vaccinated nations such as the U.S., the U.K., and Israel, continued to report flat or declines in new cases. At current rates, Germany/France/Italy are expected to reach 50% by July/August.
We are expecting a correction in copper prices, due to weaker manufacturing data from China, and as the market is expected to move to a supply surplus this year.
Over the past week, in the U.S., the Secure and Fair Enforcement (SAFE) Banking Act passed the U.S. House of Representatives (for the fourth time), and will proceed to the Senate for approval. Even though the Act did not get Senate approval the last three times, there is optimism that a Democrat-led Senate will approve this time.
As of April 23, 2021, the Canadian big four LPs are trading at a 97% premium (same as the week before) over their U.S. peers.
