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Mining companies warn of weak commodity price outlook

By illuminem briefings ๐ŸŒŽ

Jul 28 2023 ยท 1 min read

Illuminem Voices
Industrial Metalsย ยทย Mining & Metalsย ยทย Energy Sources

illuminem summarizes for you the essential news of the day. Read the full piece in The Financial Times or enjoy below 

๐Ÿ—ž๏ธ Driving the news: Some of the world's largest mining companies, such as Anglo American, have become increasingly pessimistic about a sustained rally in global commodity prices in 2021 due to a lackluster recovery in China, which resulted in a drop in H1 earnings
• The company cut dividends by more than half to $700 million following a decrease in H1 core earnings of just over 40% to $5.1 billion

๐Ÿ”ญ The context: The earnings slump took place amid a 19% decrease in the value of crucial commodities such as iron ore, copper, and coking coal, in addition to the strain from inflation
• Duncan Wanblad, CEO of Anglo American, conveyed his astonishment at the sluggish recovery in China, which he blamed on the persisting repercussions of the Covid pandemic leading to diminished demand

๐ŸŒŽ Why it matters for the planet: The mining sector's health is crucial to many industries and global economies
• A sustained dip in commodity prices could lead to decreased profitability for mining companies, potential job losses, and economic challenges in countries reliant on mining exports

โญ๏ธ What's next: The future direction of commodity prices, such as iron ore prices, may depend on the state of China's "extremely soft property market", according to Peter Cunningham, Rio Tinto's CFO

๐Ÿ’ฌ One quote: "It's more likely for commodity prices to bottom out and rally early next year rather than later this year quite honestly" (Duncan Wanblad, CEO of Anglo American) 

๐Ÿ“ˆ One stat: Despite the prevailing conditions, Goldman Sachs analysts have upgraded their six-month copper price forecast by 3% to $9,500 per tonne, compared with the current price of $8,600 per tonne

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