Miners won’t be pulling rabbits out of hats in the March quarter says analyst
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ASX-listed miners are not expected to deliver “outstanding” production results for the March quarter, particularly given softening commodities prices, says investment bank RBC Capital Markets.
A potential trade war between the US and China heaped pressure on commodity prices late in the quarter.
Hard coking coal took the biggest hit, with the price slipping 25.1 per cent on the previous quarter, followed by the iron ore price with a 15.1 per cent drop.
Aluminium dipped 12.5 per cent.
“Iron ore and coking coal were lower primarily on moderating steel demand in China, while aluminium prices rolled off as smelter restarts in China followed a period of strong prices,” mining analyst Paul Hissey noted.
“In the other key base metals, copper was also lower through the quarter, despite fundamentals remaining attractive, while nickel prices were boosted by market tightness and more broadly, the EV [electric vehicle] thematic.”
The copper price slumped 6.7 per cent, but nickel added 8.1 per cent. Gold made a slight gain of 2.1 per cent, while oil climbed 8.5 per cent.
“Overall, the softer pricing environment – coupled with broader sentiment towards commodities against the macro/trade backdrop – tended to weigh on equities,” Mr Hissey said.
Of the companies that RBC follows, it was mostly the larger players that saw a dip in share price, with gold producer Newcrest Mining (ASX:NCM) wiping off 14.3 per cent.
The smaller players tended to witness more positive share price movement. Ramelius Resources’ (ASX:RMS) share price was up 33.1 per cent, while Silver Lake Resources (ASX:SLR) added 3.9 per cent to its share price.
Gold producer Ramelius has a market cap of around $295 million, while Silver Lake, also a gold producer, has a market cap of $242 million.
“We are not expecting any outstanding items of news flow with the quarterly results, though highlight that the March quarter is typically softer from a seasonality standpoint,” Mr Hissey said.