Wall Street Transcript Interview with Rob Clifford, Analyst at Deutsche Bank AG London: Metal Miners Cut Costs After Lackluster Years of Spending
67 WALL STREET, New York - April 16, 2013 - The Wall Street Transcript has just published its Metals and Mining Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Precious Metals, Global Iron Ore Production, Emerging Market Infrastructure Construction, Midcap and Small-Cap Consolidation Activity
Companies include: Rio Tinto plc (RIO); Randgold Resources Limited (GOLD), Boliden AB (BOL.ST) and many more.
In the following excerpt from the Metals and Mining Report, an expert analyst discusses the outlook for the sector for investors:
TWST: Across the different metals that you cover, how are prices trending this year?
Mr. Clifford: Staring with iron ore, iron ore was in deficit earlier in the year simply because of winter in the Southern Hemisphere interrupting the supply chains - this is seasonal and should be totally expected. China's production drops by some 30% during December to January every year, and storms, particularly around Western Australia, interrupt shipping. So why the price rise is debated at this time of year never ceases to amaze me.
The price has now come back to around about the cost of production in China now that winter is easing and domestic production can ramp back up again. We think the marginal cost today is at the 120, 130 mark; it's trading a little bit above that at the moment.
In the base metals, we've got a bit of a short-term squeeze in some of the metals. We've got copper and zinc still currently in short supply, so trading above the marginal cost of production, and we've got aluminum and nickel very much in oversupply, trading below the marginal cost of production. So we see an environment where we do see production growth even if the rate is lower than it has been. As this production comes on, the copper and zinc markets should move back into balance; we expect flattish prices this year and then declines to long-term levels for copper and zinc. Aluminum and nickel will ultimately need to increase once they move back into deficit, but this is likely to be two years in the making.
We remain positive on the precious metals - we expect ongoing demand in gold from central bank buying and low interest rates. Tight cash positions for the miners are likely to constrain growth in both gold and platinum production, which will also be price-supportive...
For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
