- •Contents
- •Revisions to our forecasts, TPs and ratings
- •Investment stance
- •Capital cycle favours rising returns
- •Comfortable balance sheets and supportive dividend potential
- •Value relative to other stocks
- •Yield potential through the cycle
- •Mid-cycle cash generation offers supportive yields
- •Where to hide if you are bearish
- •What to buy if you are bullish
- •Limited lives weighing down IRR
- •Yields should compensate for limited lives
- •Positive earnings momentum continues to support share prices
- •Commodity price revisions
- •Commodity section
- •Commodity section
- •Preference for base metals over steelmaking materials
- •Earnings revisions
- •Risks and catalysts
- •Peer comp charts
- •Commodity price and exchange rate forecasts
- •Important publications
- •African Rainbow Minerals
- •Alrosa
- •Anglo American
- •Assore
- •Exxaro
- •Glencore
- •Kumba Iron ore
- •NorNickel
- •Rio Tinto
- •Rusal
- •Vale
- •Gold Fields
- •Harmony
- •Polymetal
- •Anglo American Platinum
- •Lonmin
- •Northam
- •Royal Bafokeng Platinum
- •Sasol
- •Disclosures appendix
vk.com/id446425943
Commodity price revisions
The table below shows changes to our commodity price forecasts. The most notable increases to our CY19 commodity price forecasts are: iron ore +17% to $88/t, copper +7% to $6,400/t, nickel +11% to $12,762/t and zinc +7% to $2,724/t.
We increase our long-term prices for copper (by 6% to $6,700/t), nickel (7% to $15,000/t), zinc (4% to $2,800/t) and iron ore (5% to $65/t) to reflect higher expected industry costs. Our full commodity price table is shown on page 61.
We forecast falling prices for steelmaking materials (iron ore, coking coal and manganese), but a recovery in base metal prices over the medium term. Our long-term commodity price forecasts are around the 90th percentile of industry cash costs. See our cost curves on pages 35-54.
Figure 57: RenCap’s commodity price forecast revisions
Average per calendar year |
2019E |
2020E |
2021E |
2022E |
LT real |
Copper, $/t |
|
|
|
|
|
New |
6,400 |
6,500 |
7,025 |
7,167 |
6,700 |
Old |
6,000 |
6,367 |
6,606 |
6,739 |
6,300 |
% change |
7% |
2% |
6% |
6% |
6% |
Nickel, $/t |
|
|
|
|
|
New |
12,762 |
14,805 |
15,728 |
16,045 |
15,000 |
Old |
11,530 |
14,285 |
14,680 |
14,975 |
14,000 |
% change |
11% |
4% |
7% |
7% |
7% |
Zinc, $/t |
|
|
|
|
|
New |
2,724 |
2,860 |
2,936 |
2,995 |
2,800 |
Old |
2,543 |
2,732 |
2,831 |
2,888 |
2,700 |
% change |
7% |
5% |
4% |
4% |
4% |
Lead, $/t |
|
|
|
|
|
New |
2,151 |
2,574 |
2,642 |
2,696 |
2,520 |
Old |
2,033 |
2,459 |
2,548 |
2,599 |
2,430 |
% change |
6% |
5% |
4% |
4% |
4% |
Cobalt (99.8%), $/lb |
|
|
|
|
|
New |
18 |
24 |
26 |
27 |
25 |
Old |
25 |
26 |
26 |
27 |
25 |
% change |
-28% |
-7% |
0% |
0% |
0% |
Iron ore fines (62% Fe, CIF China), $/t |
|
|
|
|
|
New |
88 |
85 |
78 |
70 |
65 |
Old |
75 |
67 |
65 |
66 |
62 |
% change |
17% |
26% |
19% |
6% |
5% |
Iron ore lump premium (62% Fe), $/t |
|
|
|
|
|
New |
21 |
15 |
14 |
14 |
13 |
Old |
17 |
13 |
14 |
14 |
13 |
% change |
28% |
14% |
0% |
0% |
0% |
Hard coking coal, $/t |
|
|
|
|
|
New |
187 |
170 |
165 |
168 |
150 |
Old |
178 |
161 |
157 |
160 |
150 |
% change |
5% |
6% |
5% |
5% |
0% |
Thermal coal (FOB Richard's Bay), $/t |
|
|
|
|
|
New |
85 |
84 |
84 |
86 |
80 |
Old |
93 |
86 |
84 |
86 |
80 |
% change |
-8% |
-2% |
0% |
0% |
0% |
Ferrochrome (EU), $/lb |
|
|
|
|
|
New |
1.16 |
1.27 |
1.32 |
1.35 |
1.26 |
Old |
1.22 |
1.29 |
1.32 |
1.35 |
1.26 |
% change |
-5% |
-1% |
0% |
0% |
0% |
Ethylene (US), $/t |
|
|
|
|
|
New |
489 |
815 |
944 |
963 |
900 |
Old |
548 |
831 |
944 |
963 |
900 |
% change |
-11% |
-2% |
0% |
0% |
0% |
ZAR/$ |
|
|
|
|
|
New |
14.28 |
14.40 |
14.49 |
14.79 |
13.30 |
Old |
14.31 |
14.14 |
14.17 |
14.45 |
13.00 |
% change |
0% |
2% |
2% |
2% |
2% |
Source: Renaissance Capital estimates
Renaissance Capital
1 April 2019
Metals & Mining
32