Industry Report
April 22, 2016 - The Weekly Dig
Mick Carew, PhD, mcarew@haywood.com
Haywood Mining Team
Mick Carew, PhD, mcarew@haywood.com
Haywood Mining Team
Commodity Prices Hold Firm Despite Persistent Bearish
Calls
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In previous editions of the Weekly Dig, we
noted the guarded optimism surrounding the recovery of metal prices and mining
equities. This reluctance to fully embrace the recent surge so far can be
attributed the early-year correction in metal prices experienced in previous
years since 2011, as well as negative commentary from some influential firms
that suggest the rise in commodity prices since the beginning of 2016 is not
supported by fundamentals in the physical markets. Certainly, the rise in the
price of iron ore over the previous month has taken the market by surprise,
with the May CME Iron Ore contract piercing $65 per tonne Thursday before
closing $62 per tonne. However, despite calls from certain quarters that the
run in commodities would only be temporary, with one prominent firm maintaining
its short position in gold, prices have remained buoyant, albeit amid
short-term volatility such as the 1.5% drop in the price of gold on Friday,
closing at $1.234 per ounce (↓0.14%). It is clear that regardless of the
fundamentals governing this year’s price surge in commodities, the duration and
apparent sustainability of metal prices so far in 2016 is more significant than
what was experienced in previous years. This was further reflected in the
performance of the base metals, which continued their rise during the week,
with copper, nickel, lead and zinc each finishing at $2.27 (↑4.26%), $4.11
(↑2%), $0.81 (↑4.5%) and $0.86 (↑2.1%) per pound respectively. Precious metals
including silver, platinum and palladium also finished higher at $16.95
(↑4.3%), $1,009 (↑2.5%), and $566 (↑5%) per ounce respectively. WTI crude
finished higher, closing at $43.75 per barrel. Finally, the UxC Weekly Spot
Price of uranium finished at $27.75 (↑2.8%) per pound.
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