Weekly Mining Commentary

Author: Sid Rajeev, Head Of Research

All the global equity indices we track reported gains in the past week (orange bars), amid optimism of a global economic recovery. As shown below, the unemployment rate fell again, and consumer confidence increased sharply in the U.S. last month.

Current Vs Pre COVID-19 (as of Apr 05, 2021)

Source: FRC / Various

U.S. Unemployment Rate

Source: FRC / Various

U.S. Consumer Confidence

Source: FRC / Various

Not surprisingly, base metal prices continued to retreat. We had been predicting a correction in prices due to rising inventory levels. Although we expect the demand for base metals to rise with an economic recovery, we believe that prices ran up too far, too fast in the past 12 months.

Week-over-Week (April 05, 2021) and Year-over-Year (April 05, 2021)

Source: FRC/Various

 

Except the U.S., the U.K., Italy, and Mexico, all of the top 15 hardest hit nations reported a surge in new cases last week.

Daily New Cases in the U.S., India, Poland, U.K., Turkey and Canada

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

The rollout of vaccines is ramping up across the globe. 31.8% of the U.S. population has received vaccinations vs 28.0% at the same time last week. This compares to 46.4% in the U.K. (up from 44.4%). We continue to estimate that 50% of the U.S. population will be vaccinated by June. We note that vaccine growth rates in Israel and the U.K. have slowed after surpassing 40%. Israel attributes it to vaccine hesitancy among its citizens, and a failure to reach remote residents. The U.K. has stated that they are expecting a near-term slowdown due to a vaccine supply crunch. Sources indicate that at least 70% of the population need to be vaccinated to potentially achieve herd immunity.

Among the top five most vaccinated countries (as a percentage of the total population), Israel, the U.K., and the U.S. are experiencing a decline in cases. However, Chile and Bahrain’s surge in cases is concerning. We are closely watching developments in these two countries.

Share of people who received at least one dose of COVID-19 vaccine, April 4, 2021

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

Inventory levels of copper increased five weeks in a row on the LME and the SHFE (Shanghai). We continue to expect downward pressure on prices.

LME Inventory (April 05, 2021)

Source: FRC/Various

SHFE Inventory (April 02, 2021)

Source: FRC/Various

Valuations of gold producers were up 1% WoW, while that of base metals producers stayed relatively flat last week.

Gold Producers

Source: S&P Capital IQ & FRC

Base Metal Producers

Source: S&P Capital IQ & FRC

Gold Producers and Base Metal Producers

Source: S&P Capital IQ & FRC

Our price forecasts remain unchanged. We are expecting gold to outperform the other mainstream metals this year.

FRC Forecasts

Source: FRC

Weekly Mining Commentary

Author: Sid Rajeev, Head Of Research

Source: https://www.researchfrc.com/weekly-mining-commentary-61/