During the June quarter, metal markets rebounded from the overall weakness seen in the March quarter, driven by a rebound in Chinese demand and from renewed optimism as lockdown measures began to ease and economies start reactivate. Copper, nickel, zinc, iron ore, gold, silver and platinum all rose by double digit percentages by end-June. Of note, copper moved back above US$6,000/tonne by June-end and iron ore traded back above the US$100/tonne level, as Chinese stimulus was expected to benefit these construction-intensive raw materials. For the precious metals, second wave risk and the expansion of government debt during lockdowns has elevated gold prices to their highest levels since 2012, and expectations in the third quarter are that prices will breach the US$2,000/oz mark.
Yet a significant shadow is cast over the outlook for the second half of 2020. Our tracking of mine closures throughout the pandemic identified 275 mine sites in 36 countries which were impacted, yet many commodities only suffered total suspensions that we calculated to be less than 5% of annualized output. Concurrently, in a recent analysis we also highlighted that among 52 of the largest miners, capex in 2020 was expected to fall by a total of 12%, of US$7.5 billion, spread among the base, precious and bulk commodities.
The balance of risks is to be to the downside, and the price recovery of many metals remains fragile. With supply interruptions uncertain before June quarter reporting can quantify these exactly, we nevertheless expect the second half to be driven by demand, and notably the trajectory and magnitude of recovery as major economies reactivate. Join us to hear our views on the health of the mining and exploration industry and metal markets as we explore the route through the global pandemic.
2020 June Quarter Review Topics:
- Commodity price trends, drivers and estimates
- Drilling activity and exploration metrics
- Mergers and acquisitions
- Quarterly financing activity
- Covid-19 related Capex revisions and mine suspensions