Commodities: Base metals prices at low level in the coming quarters – ABN Amro
|The sharply lower oil price means that energy costs for mining companies are falling. Oversupply is looming and with weaker demand for metals due to the coronavirus crisis, the sector’s problems will only increase, per ABN Amro.
Key quotes
“The sharply lower oil price has led to a significant reduction in operating costs, which reduces the financial stress for many mining companies.”
“Lower operating costs are often an incentive for many mining companies to maintain or even expand production, which will eventually lead to oversupply in many metal markets, and this could translate into relatively low metal prices in the longer term.”
“Economic uncertainty remains high for the time being, which will keep prices of many base metals at a relatively low level in the coming quarters.
“ABN AMRO expects the oil price to reach USD 50 per barrel at the end of 2021, which will continue to challenge the mining sector. It also implies that marginal and unprofitable mines will be able to continue producing for some time to come.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.