Moody’s revises outlook for global base metals

Investor service and ratings agency Moody’s has changed its outlook for the global base metals industry to stable from negative.
Its most recent report ‘Global Base Metals Industry: Prices Off Bottom But Upside Limited as Global Economy Faces Slow Recovery’ states that prices for aluminium, copper, nickel and zinc are unlikely to deteriorate further over the medium term.
“We view prices for base metals as having likely bottomed following the sharp decline beginning late last year, and consequently we have revised our price sensitivity assumptions,” says report author Carol Cowan.
She adds that challenging industry conditions should continue through at least 2018 until the industry can recalibrate the supply levels to match demand.
The report also states that all base metals, with the exception of zinc, will remain oversupplied, with exchange inventories remaining high. The major driver of the recent price stabilisation is growth expectations from China, a major producer and consumer of base metals.
“China continues to drive investor sentiment toward base metals. Stimulus measures from the government, including easing of credit, reducing reserve requirements and increasing infrastructure spending have helped offset the country’s decelerating gross domestic product trajectory,” Cowan notes.
Moody’s stable industry outlook reflects expectations for the fundamental business conditions in the industry over the next 12 to 18 months.

MININGWEEKLY