Author: Sid Rajeev, Head Of Research

Weekly Mining Commentary

The U.S. Fed’s dovish comments last Friday drove global equity indices and mainstream metals higher; treasury yields and the US$ retreated. We note that five of the seven indices listed below are trading at record-highs. As economic indicators are well below pre-pandemic levels, we believe corrections in equity markets are likely when the Fed shifts to a hawkish stance (likely in Q4, if inflation increases significantly from current levels).Current Vs Pre COVID-19 (as of Aug 30, 2021)

 

Copper and zinc prices performed well despite higher inventory levels on the LME.

Week-over-Week (Aug 30, 2021) and Year-over-Year (Aug 30, 2021)

Source: FRC / Various

SHFE Inventory (Aug 27, 2021)

LME Inventory (Aug 30, 2021)


Valuations of gold producers were up 4%; base metal producers were up 6%.

Gold Producers and Base Metal Producers

Source: S&P Capital IQ & FRC

Last week, only three (unchanged from last week) out of the 15 hardest hit nations (including the U.S., India, and Germany) experienced higher daily new COVID-19 cases. Six countries (five last week) experienced WoW increases in deaths. In the U.S., deaths to daily new cases is at 0.75% (vs 0.5% last month) vs 1.5%-2.0% from the highs earlier this year. Deaths are increasing as sources indicate that the current form of vaccines is slightly less effective against the Delta variant. In B.C. (Canada), the unvaccinated account for approximately 71% of new cases, and 79% of hospitalizations. Sources indicate that 0.02% of fully vaccinated individuals get infected vs 0.2% of unvaccinated, clearly indicating the need for increasing vaccination rates across the globe. As mentioned last week, we believe Pfizer’s approval will result in higher vaccination rates.

Globally, 39.3% have received at least one dose vs 32.5% at the same time last week, marking the largest WoW increase. 73.1% of Canadians have received at least one dose (previously 72.6%). 66.4% of Canadians are fully vaccinated (previously 65.6%) vs 62.6% in the U.K. (61.4%), and 51.6% in the U.S. (51.1%).

Share of people vaccinated against COVID-19, Aug 29, 2021

We are maintaining our price forecasts.

FRC Forecasts

Source: FRC

Author: Sid Rajeev, Head Of Research

Source: https://www.researchfrc.com/weekly-mining-commentary-82