Top miners set to suffer from global industrial slump, Deutsche Bank says
By Louis Goss
The world's top mining companies are set to be hit by a drop in metals prices caused by a major slump in industrial activity in China, the U.S. and Europe, Deutsche Bank has said.
The anticipated slowdown in industrial activity is set to push down the price of metals including copper, nickel and iron ore from recent highs, analysts led by Liam Fitzpatrick said in a note.
Major mining firms including Glencore (UK:GLEN), Rio Tinto (UK:RIO), and BHP Billiton (AU:BHP) are, in turn, likely to take a hit to their bottom lines in 2024 and 2025, as metals prices soften.
Deutsche Bank's analysts explained that macroeconomic data is now signaling the world is set for a "synchronous downturn in industrial activity in China, the U.S. and Europe."
At the same time, there are few signs industrial activity will pick back up from already low levels, even in the face of falling inflation and cuts to interest rates, the analysts said.
As such, Deutsche Bank's analysts are now expecting metals prices will drop sharply over the next two quarters, in slumps that will see prices remain low into 2025.
The analysts cut their aluminum, copper and nickel price forecasts for the fourth quarter of 2024 as they predicted falling steel prices will also see coking coal prices suffer.
Deutsche Bank's analysts, in turn, cut their target prices for an array of the world's largest metals producers including Anglo American (UK:AAL), Antofagasta (UK:ANTO), and Norsk Hydro (NO:NHY).
Canadian copper miner First Quantum (CA:FM) took the sharpest hit, as Deutsche Bank's analysts downgraded its earnings forecasts by 12.9% for 2024 and by 14.1% in 2025.
The analysts also cut Lundin Mining's (CA:LUN) earnings forecast by 9.1% in 2024 and 12.8% in 2025, as a result of the falling price of base metals including copper, zinc and nickel.
Vale (VALE), the Brazilian company which is the largest iron ore and nickel producer in the world, is set to see its earnings come in 8.1% lower than expected in 2024 and 8.2% lower in 2025.
Anglo American, which mines around 40% of the world's platinum supply, is also set to see its earnings come in 7.3% lower in 2024 and 9.8% lower in 2025, Deutsche Bank's analysts said.
-Louis Goss
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
09-10-24 0643ET
Copyright (c) 2024 Dow Jones & Company, Inc.-
What’s the Difference Between the CPI and PCE Indexes?
-
Micron Earnings: Great Guidance but Stock Now Looks Fairly Valued
-
August PCE Report Forecasts Show More Good News on Inflation
-
AI Stocks May Be Down, but Don’t Count Them Out
-
4 Stocks to Buy as the Fed Cuts Interest Rates
-
Markets Brief: The Uncertain Path to Neutral Interest Rates
-
What’s Happening in the Markets This Week
-
Where Top Stock Fund Managers Are Looking Next After the Fed Rate Cut
-
Our Top Pick for Investing in US Renewable Energy
-
How to Measure a Stock’s Uncertainty
-
How to Determine Whether a Stock Is Cheap, Expensive, or Fairly Valued
-
Why a Company’s Management and Capital Allocation Matter
-
How to Determine What a Stock Is Worth
-
How to Measure a Company’s Competitive Advantage
-
How to Think Like a Stock Analyst
-
How GLP-1 Drugs Like Ozempic Are Boosting Biopharma Stocks