The missing ingredient is growth

Measured relative to the average duration of historical metal cycles, we are nearing the bottom of the current cycle now. Our historical modeling suggests the bottom could be three to four months away. If only life were that simple! A precondition for the onset of a fresh cycle is an acceleration in global growth. As the International Monetary Fund has shown in its recently revised global economic forecasts, a meaningful pickup in growth has become less likely as successive forecasts have been wound back. Europe, the USA, Japan, China and most major emerging economies are battling to sustain existing growth rates. Central bank policies, always more likely to affect asset prices than the real economy, are making little net impact on the growth outlook in the near term. Without an upside surprise to growth which raises the risk of commodity shortages, the mining industry is likely to keep markets adequately supplied preventing the need in the foreseeable future (possibly over the next 3-4 years) for an improvement in cyclical price conditions.