Global metal market – is there a light at the end of the tunnel?

Article by Magnus Ericsson, Anton Löf & Olof Löf in World of Mining – Surface & Underground 69 (2017) No. 1.

Finally there is light in the end of the tunnel! Analysis of a number of indicators points towards a turn around in metals market during 2017 after several difficult years:

  • metal prices,
  • equipment orders,
  • financial markets,
  • exploration expenditure.

The past years certainly were disastrous in terms of the depth of the fall, but it must not be forgotten that the downturn started from an extreme high whether in 2011 or earlier. Metal prices in index form have indeed fallen by around 50 % between 2011 and 2016, but the index is still 100 % above the levels during the ten years from 1995 to 2004. The copper price on the 30th of December 2016 was 5500 USD/t, an increase from the 1st of January by 18 %. But this is still down 44 % from the beginning of 2011. But if we put today’s price into a century long perspective it is obvious that it is on a level clearly higher than the average over the entire  20th century (Figure 1). With price graphs anything can be proved it is just a matter of choosing the right time period!

The past years have not been as bad as they have been portrayed. Demand has been there all the time, production volumes have not dropped dramatically if at all. The so called ”crises” is to a large extent an over-supply issue not a drop in demand. The main driving forces behind the super cycle boom: population growth, urbanisation and improved standard of living all over the world are still craving for more metals.

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