Mining shares to outperform again: Jefferies

By Staff reporter / September 13, 2021 / www.mining-journal.com / Article Link

"These reasons include a likely shift to less tight policies in China, an expected seasonal uptick in demand, an easing of lockdowns in China and elsewhere, and ongoing supply constraints for almost everything in mining," analyst Christopher LaFemina said in a note on Friday.

"Our China team expects a recovery in Chinese economic activity in 4Q on the back of what could be improving credit conditions."

He said an easing of lockdowns as COVID cases declined should help and construction activity in China typically picked up in September-October.

"Gradual improvements in demand combined with significant supply constraints should be enough to push prices for most commodities higher," he said.

"Our preferred miners for leverage to the next push higher continue to be Glencore, Freeport, and First Quantum.

"We believe the risk/reward trade-off in iron ore miners is also improving following the recent collapse in the iron ore price."

Iron ore reached a record high above US$220 per tonne in May but is back around levels of 12 months ago of about $130/t.

August was a dramatic month for commodity prices, fellow investment bank BMO noted two weeks ago. 

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