This quarter, RCF builds on the prior quarter’s (Q1 2024) coverage of the growing disconnect between commodity prices and project development activity by expanding the analysis to consider how specific prices have moved and what it means for the overall investment environment.
Over the past six months, metals & mining commodity prices are up 12% (24% annualized), while metals & mining equity prices are down -2% (-4% annualized), as shown by the figure below.
Figure 1: Commodity vs Equity Price Changes over the past 6 months
At the headline level, there is value in the metals & mining equity market. Diving deeper into the commodity market price detail, the following table goes beyond the Bloomberg All Metals index and shows the six-month price change, along with which phase RCF sees each metal within the overall mining cycle.
Figure 2: Specific Metals & Mining Commodity Price Changes over the past 6 months
| Phase | Metal | Change | 31-Dec-23 | 30-Jun-24 | Units |
|---|---|---|---|---|---|
| Growth | Gold | 13% | $2,063 | $2,327 | oz |
| Copper | 12% | $8,464 | $9,456 | tonne | |
| Iron Ore | -24% | $140 | $107 | tonne | |
| Formation | Bauxite | 6% | $71 | $75 | tonne |
| Molybdenum | 15% | $19.6 | $22.6 | lb | |
| Platinum | 0% | $992 | $996 | oz | |
| Silicon (553) | -15% | $2,135 | $1,805 | tonne | |
| Silver | 22% | $24 | $29 | oz | |
| Tin | 29% | $25,175 | $32,478 | tonne | |
| Tungsten | 13% | $305 | $345 | mtu | |
| Uranium | -7% | $92 | $86 | lb | |
| Trough | Aluminum | 6% | $2,346 | $2,488 | tonne |
| Zinc | 9% | $2,640 | $2,879 | tonne | |
| Lead | 7% | $2,035 | $2,177 | tonne | |
| Tantalum | 14% | $70 | $80 | lb | |
| Cobalt | -16% | $14 | $11 | lb | |
| Vanadium | -8% | $6.5 | $6.0 | lb | |
| Decline | Palladium | -11% | $1,100 | $977 | oz |
| Nickel | 4% | $16,375 | $17,040 | tonne | |
| Lithium | -8% | $14 | $13 | kg | |
| Rare Earths | -20% | $62 | $50 | kg |
The table shows notable ‘energy transition metal’ price strength in silver and tin over the half year. Conversely, there are investment value opportunities in other commodities that have not performed as well, specifically: vanadium, silicon, cobalt, rare earths and iron ore.
Finally, the following figure shows how commodity prices have moved over the course of the past six months, organized by metals that are physically traded and those that are financially traded.
Figure 3: Commodity Price Changes over the past 6 months (31 Dec 2023 – 30 Jun 2024)
The key takeaways from the above figure:
The bottom half of physical markets stack shows the price dynamics mainly related to weakness in China.
The financially traded metals data shows more commodity market positivity and that speculators were active in the past six months (‘higher highs’ relative to physical markets), with spot prices having fallen from their highs, but largely remaining positive YTD.
Important Information
This material is provided for educational purposes only and should not be construed as research. The information presented is not a complete analysis of the commodities landscape.
Forward-looking statements are presented for illustrative purposes only and are not guarantees of future performance. Actual performance will vary due to a variety of factors, including general economic conditions. Neither RCF nor any independent third party has independently audited or verified this information.
The opinions expressed may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by Resource Capital Funds and/or its affiliates (together, “RCF”) to be reliable. No representation is made that this information is accurate or complete. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader.
None of the information constitutes a recommendation by RCF, or an offer to sell, or a solicitation of any offer to buy or sell any securities, product or service. The information is not intended to provide investment advice. RCF does not guarantee the suitability or potential value of any particular investment. The information contained herein may not be relied upon by you in evaluating the merits of any investment.
References to market, composite, or commodity specific indices, determined by a third party, are provided for informational purposes only. Index information was compiled from sources that RCF believes to be reliable. No representation or guarantee is made hereby with respect to the accuracy or completeness of such data. Reference to an index does not imply that a fund will achieve returns or other results similar to the index. These indices cannot be invested in directly by a fund or other investors. The market volatility, liquidity, concentrations, restrictions and other characteristics of private market investments are materially different from indices, and therefore the indices do not necessarily reflect a basis for comparison with private market investments. The performance of these indices is reported on the gross performance of the underlying assets and does not take into account any fees or expenses that may be associated with investing in those assets. Any attempt to mimic the indices will result in fees and expenses associated with investing and will reduce performance.
Past performance is not indicative of future results. Investing involves risk, including possible loss of principal.