I had the opportunity for a Bloomberg TV interview to discuss my thoughts with respect to the base metals sector, as well as the prospects for the bigger miners. When we look at the various metals - copper, zinc and nickel - the outlook is quite divergent. Zinc has performed strongly and has risen by almost 40% so far from its January low, accompanied by a two-thirds fall in LME inventories over the past few years, so the much-anticipated supply-side crunch is drawing near. With respect to copper and nickel, the outlook is more modest. Recently we've seen an improvement with respect to China's imports for both - with the May monthly figures looking quite solid. However there's unlikely to be a significant price recovery during the course of this year. Iron ore too is likely to move sideways at best. My personal view is that there's better value and upside elsewhere in the market away from BHP and RIO and among the smaller independent players, with exposure to better-performing commodities - like gold, zinc, graphite and lithium. (VIEW LINK)
Comments
Patrick Poke
Great interview on Bloomberg Gavin, I caught it earlier today. It's interesting to see how 'commodities' still seem to get grouped in together by many. The outlook for commodities such as lithium, graphite, zinc, gold, silver, cobalt, and depending who you ask, uranium, seem fairly positive. On the other side though, bulk commodities look like they've got a long way to go before any kind of recovery.
Gavin Wendt
Thank you for your kind words Patrick. Yes, it's important to distinguish between the commodities and their various outlooks. The big picture for most commodities looks quite positive, but the bulks are a different story.