The mining and metal industry is bracing for months of price weakness as slowing demand in the US, Europe, Japan and some emerging markets, including China, is likely to push commodities such as copper into surplus.
At the London Metal Exchange annual dinner last night, the premier gathering of the industry in London, the mood among traders, bankers and mining executives was gloomy, particularly with regard to the short term.
"With the likelihood of a global recession rising, industrial metals prices will face further downward pressure," said a report by Francisco Blanch of Merrill Lynch.
Over the medium-term, some analysts and executives see some bright spots in the market. Leon Westgate, a metal analyst at Standard Bank, said that looking ahead towards the start of the next decade a demand recovery and in some cases the need for restocking by consumers will come into play. "Given the current low price of metals relative to production cost, and the impact of expensive capital, we may see supply retreat further," said Mr Westgate.
Wednesday, October 15, 2008
Financial Times: Gloomy Short-Term Outlook for Metals
This article won't be a surprise to anyone who owns or has been following the share prices of mining companies, Financial Times: "Mining and metals prepare for lean times". Excerpt: