Research agency BMI on January 17 unpacked the key themes for metals and mining for the year, highlighting that the sector is making a modest recovery amid global deceleration.
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Now let’s start with the first and overarching theme of the year in General on an annual average basis we expect metal prices to average slightly higher in 2024 compared to 2023 levels but remain under significant pressure we hold a mildly positive view on the overall Metals complex in 2024 as
You can see from this table which presents most of our proprietary metal and mineral or uh price forecast most of the Commodities here will average slightly higher in 2024 compared to 2023 on an annual average basis but there will be no return to 2022 highs um our
Prognosis is based on a Confluence of factors including fundamentals technicals and the global macroeconomic back backdrop in general this year we do not expect prices to see the Steep declines of 2023 there are a number of factors placing a floor under metal prices but also other factors building a strong
Resistance to cap uh price growth now this is ENT now this essentially means we expect more price stability this year uh cetrus parabus those two words cetrus parabus if all else remains equal are the most important words any analyst can use these days barring any external shocks to the market that we cannot
Envisage right now global metal prices are on a more stable pathway in 2024 than the last couple of years as is evident on the left hand side uh chart here where you can see the most commonly used Industrial Metals indices as volatile as ever since 2020 on the right
Hand chart here you can see select metal stocks inventories on the LM to be specific and over the course of 2023 you will notice a substantial buildup due to a number of factors last year including but not limited to weak demand and over Supply with stocks at a higher level in
2024 compared to the past few years downside risks to prices remain high with the sector significantly exposed to poor sentiment or weaker demand than is priced in at the moment despite our outlook for greater price stability we highlight that metal prices are prone to downturns should negative external factors aggravate the
Market looking within the metals complex we expect feris metals to benefit more in 2024 compared to base Metals among base Metals we expect copper to Fair better than aluminium and nickel due to the Copper Market being tighter than the latter two in 2024 among Fest Metals we expect iron or
To lead gains in the overall Industrial Metals comp complex as price resilience continues from positive sentiment over Mainland Chinese stimulus hopes falling po uh falling Port inventories and strong demand from the country’s non-property sectors including Machinery shipping autos and infrastructure now at this juncture it’s imperative that we speak about mainland
China and what is happening in that market China is the world’s largest producer as well as consumer of metals as you can see on the leftand chart so policies in China news out of China and of course fundamental demand and Supply in China impacts metal prices greatly
China has always been uh and continues to be a major risk generator for metal markets globally the mainland Chinese economy continues to face a number of downside risks most importantly uh to Metals is its real estate sector’s financial difficulties our country risk team for cast Chinese economic expansion will slow to
4.7% in 2024 with risk slated to the downside excluding 2020 this would be the country’s slowest rate of growth since 1990 PMI figures as displayed on the right hand chart remain Grim offering little hope for a strong rebound as well we believe the housing market downturn in mainland China will
Last years Weighing on Metals demand after years of serving um speculative demand the housing market is arguably overs supplied especially as the downturn has likely led to the exit of speculators meanwhile still poor affordability and weak sentiment means that serious home buyers are likely to stay away as well especially as more
Developers are likely to face financial difficulty so all this just means that Metal’s demand from Mainland China’s property sector is not going to recover anytime soon and definitely not in 2024 now that said we believe the government will stick to its commitment to support growth this was reiterated
During the most recent Central economic work conference in December during which policy makers signaled a 5% growth Target for this year 2024 and stimulus should ensure that infrastructure spending will help to offset weakness in real estate investment we also expect other sectors including Machinery shipping and Autos
To prevent a collapse to uh Metals demand now moving on quickly to Gold precious metals in general we hold a very optimistic view on gold prices this year as the safe haven asset as you can see on the leftand chart is boosted by a number of factors including the fall in
Interest rates and expected rate cuts by the US fed gold has benefited from economic and geopolitical risks since 2020 with prices witnessing a pronounced rally since the start of the war in Gaza in October last year and Amplified by the US’s uh us fed’s doish tone at its
December meeting and the weakening of the US Dollar on the right hand side table you can see most of the gold price drivers that we have listed here indicate a bullish outlook for gold in 2024 now moving on for both industrial and precious metals price Direction Over
2024 will be determined much by the macroeconomic Outlook we expect the global economy and most developed markets to continue slowing in 2024 severely impacting demand for metals that said our Outlook towards the global economy is now less Bleak than it was a few months ago our country risk team is
Now forecasting ing a much gentler growth slowdown in the US from an estimated 2.5% in 2023 to 1.4% this year compared with uh 0.8% forecasted previously and this supports our view of a slight increase in metals prices but not a rebound looking at the US dollar
The US dollar Index the dxy weakened to 101 at the end of 2023 as the FED made it clear that they were done with the hiking cycle and the next move would definitely U likely be a cut it is now hovering around 102 which is significantly lower than the 2022 high
Of 114 and 2023 high of 106 our macro team expects the dollar to trade within a range of 100 to 108 this year with potential for the dxy to push even lower to the 95 level should the FED turn um even more doish as inflation cools r s
Are if there is a continued pickup in Risk sentiment now this will support demand for Metals General Commodities that are priced in the green back overall We Believe 2024 will be a close tug-of war between fundamentals and sentiment driven by macro factors as you can see on the leftand chart we
Expect most metal markets to tighten in 2024 forming the basis of our more positive price Outlook notably we expect the copper Market to head in deficit once again in 2024 driven by demand from the power and construction sectors globally while the outlook for these sectors are positive in 2024 the other
Two major Metals demand generators will see a Slowdown these include Global vehicle production and household spending preventing demand and prices from R Rising significantly so to finish up we expect 2024 to tell a demand Side Story as Metals across the complex awaits for uh await for stimulus from
Mainland China one that would actually materialize and a pickup in demand from all kinds of global Industries to see the light at the end of the Tunnel
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Thanks for your hard work in compiling this review….