Categories: Base Metals / Energy / General Market Commentary
Topics: General Base Metals / General Energy / General Market Commentary

Glencore sees zinc, nickel, copper price rally continuing

Glencore sees zinc, nickel, copper price rally continuing

 

Miner and commodities trader Glencore (LON:GLEN) produced some stellar results on Thursday and the Switzerland-based company also provided a positive outlook for 2017, particularly for its base metals business.

Glencore is the world's number four copper producer and top 3 zinc supplier and its clout on base metals markets is only amplified by its trading arm.

Last year Glencore's metals and minerals division recorded revenues of $66.3 billion with 'marketing activities' contributing $42.1 billion of the total.

The Baar-HQed company's 'industrial activities' revenue jumped 25% last year thanks to better fundamentals and rising metal prices which it expects to continue in 2017.

Here are some highlights from Glencore's outlook:

Copper


Near-term demand prospects appear positive. A political transition year in China should ensure continued positive fundamentals while the actual and looming infrastructure programs in Japan and North America should start to lend support to non-Chinese consuming regions.


Supply-side fundamentals also improved markedly during the year. Despite some scaremongering, the “wall of supply” failed to emerge.


The stresses induced by 18 months of low pricing and related actions to enhance cash flows are only just starting to manifest themselves
New supply growth from Peru was almost fully offset by production decreases in Chile and elsewhere, and continued shutdowns in the African copper belt. Indeed, the copper market appears to be reverting to form, with an unusually low volume of mine disruptions seen in H1 2016, but increasing in the second half of the year.

The stresses induced by 18 months of low pricing and related actions to enhance cash flows are only just starting to manifest themselves.

The prospect of demand growth across Asia, Europe and the US, as well as the likelihood of difficult labour contract negotiations at some of the industry’s major mines over the coming year, suggest that pricing risks lie to the upside in 2017.

Nickel

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