Those commodity markets recently experiencing precipitous price falls have had one thing in common: large gaps between prevailing prices and production costs
John Robertson
PortfolioDirect
Those commodity markets recently experiencing precipitous price falls have had one thing in common: large gaps between prevailing prices and production costs. How low can copper prices now fall? The chart shows estimates of the cost of producing refined copper each year since 1997 (based on data from the Chilean Copper Commission) and average annual prices. Note the connection between the two lines over the first six years of the period covered before the cyclical rise in prices began. Costs have also risen dramatically since 2005 so sub-$1/lb prices are no longer on the cards but, whatever their level, they will continue to set the lower bound for prices in more normal markets and without an unanticipated surge in demand. Meanwhile, lower prices will encourage action to cut costs which will also be pressured lower outside the USA by a stronger US dollar.
Never miss an update
Enjoy this wire? Hit the ‘like’ button to let us know.
Stay up to date with my current content by
following me below and you’ll be notified every time I post a wire
John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business strategist and investment market professional for over 30 years after starting his career as a Commonwealth Treasury economist in Canberra. Since being Australia's top-rated commodities analyst and chief economist at one of Australia' leading stockbroking firms, he has advised companies across the mining, consumer products, IT and biotech sectors on their equity market relations. He leads the firm's investment evaluation and security structuring activities on behalf of the Australian Small Scale Offerings Board (ASSOB), the world's first equity 'crowdfunding' investment platform. John Robertson discusses the interaction of mining and investment markets in his weekly 'From the Capital' column in Mining Journal.
1 topic
John Robertson
PortfolioDirect
John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...
Expertise
No areas of expertise
John Robertson
PortfolioDirect
John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...
Expertise
No areas of expertise
Comments
Comments
Sign In or Join Free to comment