Weekly Mining Commentary

Global equity markets were down 2.3% last week (up 1.5% in the prior week) amid several negative events – a) rising new cases of Omicron in Europe, and the Delta variant in the U.S., b) governments implementing new measures/restrictions, c) the U.S. Fed’s hawkish comments, and d) a struggling Chinese economy. Although both Pfizer (NYSE: PFE) and Moderna (NASDAQ: MRNA) have stated that their booster shots are effective against Omicron, we believe government restrictions and increased uncertainties will slow down the global economic recovery, and prompt central banks to reconsider their hawkish stance. As Omicron will exacerbate supply chain woes, we believe inflation will be the #1 concern for central banks.

 

Current Vs Pre COVID-19

Source: FRC / Various

Last week, five countries (previously four) out of the 15 hardest hit nations experienced higher daily new cases. Five countries (previously two) experienced WoW increases in deaths. Globally, 56.86% have received at least one dose, up 0.9 ppt WoW vs 1.0 ppt the same time last week. 76.93% of Canadians are fully vaccinated (0.2 ppt vs 0.3 ppt) vs 68.91% in the U.K. (0.4 ppt vs 0.3 ppt), and 60.95% in the U.S. (0.6 ppt vs 0.9 ppt).

Vaccination rate + Share of people vaccinated against COVID-19

Source: Our World in Data / FRC

Metal prices and the US$ were relatively flat last week. Inventory levels remain volatile on the LME and the SHFE (Shanghai), and are not providing any clues for nearterm prices.

WOW, YOY, LME

Source: FRC / Various

 

SHFE Inventory WOW

Source: FRC / SHFE

Valuations of gold producers were up 3% WoW; base metal producers were down 1%.

Gold Producers

Source: S&P Capital IQ & FRC

 

Base Metal Prod

Source: S&P Capital IQ & FRC

FRC Forecasts

Source: FRC