Author: Sid Rajeev, Head Of Research

Weekly Mining Commentary

Global equity indices were up 1.6% last week as North American and European markets shrugged off fears of a potential spillover of the debt crunch faced by China Evergrande Group (SEHK: 3333).

Copper prices gained strength as well.

Week-over-Week (Sept 27, 2021) and Year-over-Year (Sept 27, 2021)

Source: FRC / Various

LME Inventory (Sept 27, 2021)

Source: FRC/Various

SHFE Inventory (Sept 24, 2021)

Source: FRC/SHFE

Valuations of gold producers were down 1% WoW; base metal producers were up 2%.

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

Last week, two (unchanged) out of the 15 hardest hit nations experienced higher daily new COVID-19 cases. Only one country (vs two previously) experienced a WoW increase in deaths.

Globally, 44.5% have received at least one dose, up 2.2 ppt WoW vs 1.2 ppt the same time last week. 76.4% of Canadians have received at least one dose (up 1.0 ppt vs 0.8 ppt). 70.3% of Canadians are fully vaccinated (1.0 ppt vs 0.9 ppt) vs 65.6% in the U.K. (0.5 ppt vs 0.6 ppt), and 54.6% in the U.S. (0.7 ppt vs 0.8 ppt).

Share of people vaccinated against COVID-19, Sept 26, 2021

Source: Official data collated by Our World in Data.

We continue to expect a correction in both equity markets and base metal prices, amid weakness in manufacturing activities (see charts below), and slow vaccination rates in developed economies.

China Manufacturing and U.S. Manufacturing

Source: Trading Economics

However, we are raising our copper price forecast for H2-2021, as prices in Q3 have been higher than expected. We are lowering our gold price forecast, as prices have been lower than expected in Q3.

FRC Forecasts

Source: FRC

Author: Sid Rajeev, Head Of Research