Weekly Mining Commentary

Author: Sid Rajeev, Head Of Research

Four of the seven global equity indices we track retreated in the past week (orange bars).

Current Vs Pre COVID-19 (as of Mar 22, 2021)

Source: FRC / Various

Prices of mainstream metals were relatively stable last week.

Week-over-Week (Mar 22,2021) and Year-over-Year (Mar 22, 2021)

Source: FRC / Various 

After several consecutive weeks of declines, India and Germany experienced a surge in new cases of COVID-19 last week. Eight of the top 15 hardest hit nations reported a WoW increase in new cases last week.

Daily New Cases in the United States, Brazil, India, UK, Italy and Canada

Source: https://www.worldometers.info/coronavirus/

The rollout of vaccines is ramping up in most of the hardest hit nations. 24.3% of the U.S. population has received vaccinations vs 20.9% at the same time last week. This compares to 40.7% in the U.K. (up from 35.6%). As the U.S. has increased its run-rate, we now expect 50% of the U.S. population will be vaccinated by June instead of July.

COVID-19 vaccine doses administered

Source: https://www.worldometers.info/coronavirus/

Share of people who received at least one dose of COVID-19 vaccine, Mar 21, 2021

Source: https://www.worldometers.info/coronavirus/

The vaccine rollout is prompting a significant increase in air travel in the U.S., which we believe indicates rising confidence, and bodes well for an economic recovery.

European countries have resumed their use of AstraZeneca (LSE: AZN) vaccines after suspending for a few days over blood clot concerns. The European Medicines Agency’s (EMA) initial investigation concluded the vaccine is safe and effective.

Inventory levels of copper continue to increase on both the LME, and the SHFE (Shanghai). Copper prices have remained resilient, although we have been predicting near-term weakness.

LME Inventory ( March 22, 2021)

Source: FRC/ Various

SHFE Inventory ( Mar 19, 2021)

Source: FRC/ SHFE

Our outlook is reflecting in equities, as valuations of base metals producers were down 6%. Valuations of gold producers were up 2% WoW.

Base Metal Producers

Source: S&P Capital IQ & FRC

Gold Producers

Source: S&P Capital IQ & FRC

Gold Producers and Base Metal Producers

Source: S&P Capital IQ & FRC

 

 

Although the rise in COVID-19 cases last week is concerning, we remain firm on our outlook for an economic recovery in the second half, based on the strong rollout of vaccines, and improving consumer sentiment. Our price forecasts remain unchanged.

FRC Forecasts

Source: FRC

In the following section, we review companies that announced key developments in the past week. The table below summarizes the changes we made in ratings/fair value estimates/EPS projections of companies under coverage in this report:

Companies that announced key developments in the past week

Source: FRC

Weekly Mining Commentary

Author: Sid Rajeev, Head Of Research

Source: https://www.researchfrc.com/weekly-mining-commentary-59/