Is mining back in a bull market?

After years of brutal readjustment from the boom, is mining well and truly out of the downturn?

New data from the Bloomberg Commodity Index, which follows a number of raw materials, is tracking more than a fifth above its low in later January earlier this year.

According to Bloomberg, this movement qualifies it as bull market.

In terms of resources, the Bloomberg World Mining Index is up 24 per cent after a three year rout, much of this driven by BHP which has seen a 16 per cent rise in value over the year to date.

“The broad-based recovery in commodity markets this year has tipped several markets into bull market territory,” Mark Keenan, head of commodities research for Asia at Societe Generale in Singapore told Bloomberg.

“Overall, sentiment is good but remains cautious, the market is evolving significantly.”

Zinc has been the best performing metal this year to date, following Glencore’s decision to shutter its operations in order to address oversupply issues in the market, and saw the metal declared ‘bullish’ by Goldman Sachs for the first time in 12 months

At the time a source close to Glencore told Australian Mining it believes it is more valuable to reduce production and keep the asset in the ground until prices rise, and sees the lack of a strong zinc pipeline ahead as a welcoming omen for potentially raising output in the future.

Gold and silver have also seen strong fundamentals on the back of a weaker US dollar, with gold acting as an investment safehaven.

In terms of bulk commodities, iron ore’s rallies, following by the metal receding to a new benchmark price of around US$50 per tonne highlight renewed strength and confidence in the metal.

For coal, planned Chinese coal production cuts are finally making an impact on price, with expectations of a 20 per cent price growth in value by the end of 2016.

Early exploration green shoots are also showing, forecasting a focus back on future developments and away from the current regime of cost-cutting.

 

 

 

  • Defendor

    Nope. Not even close. Gold and silver will probably stay strong as a currency hedge against global economic uncertainty.. The rest? who knows? One sneeze from China and well…