Global steel price boosts value of WA listed companies: Deloitte

The global steel price increase has boosted the value of Western Australian-based listed companies, with the 2017 financial year closing at $152.6 billion – a 13.5 per cent increase on 2016, according to Deloitte’s latest WA Index.

This special edition of the Deloitte WA Index was released at the Diggers & Dealers Mining Forum in Kalgoorlie today, which indicated 2017 as a period of rebalance following a 11.6 per cent drop in 2015 and a steady turnaround in 2016.

It noted that financial gains were driven by the increased global steel price, caused by both Chinese and US Government infrastructure development commitments that supported bulk commodity markets.

Deloitte national mining leader Nicki Ivory said despite some periodic turbulence, commodity markets showed strong growth across the board, with a more optimistic outlook from last year.

“This year’s performance more closely represents a rebalance of pricing as markets come to terms with uncertainty and volatility representing a new normal,” she said.

“In our resources rich state, demand for mining services often acts as a lead-indicator for the overall health of the energy and resources sector. We should be hopeful this signals optimism for increased mining investment and activity over the coming year.”

“This year it is encouraging to see a number of our top movers and shakers being service providers to the extractive industries. Strategic consolidations, capability diversification and the continued drive for innovation and technology-led solutions all played a role in advancing the market capitalisation of our highest movers, underpinned by general commodity price recovery.”

Deloitte WA Index High Growth Awards 2017

At Diggers and Dealers, Deloitte will also recognise the top three movers in the WA Index top 20 in terms of market capitalisation growth for the year ending June 30 2017. These are:

  • Monadelphous Group: Increased its market capitalisation by 88 per cent from $699m to $1,313m
  • South32: Increased its market capitalisation by 71 per cent from $8,199m to $14,002m
  • Fortescue Metals Group: Increased its market capitalisation by 49 per cent from $10,898m to $16,233m

Deloitte will also recognise the largest three movers of the WA Index top 100, for the same period. These are:

  • Tawana Resources: Increased its market capitalisation by 1,915 per cent from $4m to $86m
  • Emeco Holdings: Increased its market capitalisation by 1,332 per cent from $18m to $253m
  • Paringa Resources: Increased its market capitalisation by 441 per cent from $26m to $142m.

The Index also found that coal delivered the strongest result in the 2017 financial year, as government policy and poor weather impacted supply of both coking and thermal coal.

Coking coal finished the year 61.1 per cent higher than June 2016 at US$145.00 per tonne, despite volatility in the year and thermal coal finished the year 42.1 per cent higher at US$80.95 per tonne.

However, uranium struggled, with prices finishing 25.6 per cent lower than the start of the year at US$20.10/lb. The fall in price follows significant withdrawals from nuclear power generation in America and Europe, despite supply cuts initially increasing the price.

With the general commodity market improving, and the uncertainties of Brexit and the US election behind us, it was no surprise gold and silver retreated during the year.  The value of these traditional safe bets during periods of uncertainty was pushed down by a strong US dollar and positive growth results from the US and UK.

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