By Steve Fiscor, Editor-in-Chief

Gold settled above $2,000 per ounce (oz) as this edition was going to press. Gold and silver prices were up 2.6% and 10% respectively during November. Despite the perceived headwinds of a strong dollar, rising interest rates and a slight rally in the stock market, gold has moved higher. Many traders chalked it up to strong buying by central banks, but they also believe a reversal of those headwinds could cause the yellow metal to break out. The market for silver usually tracks along with gold. With more demand coming from the industrial sector, however, silver could also rally.

Price volatility with platinum group metals was relatively flat except for palladium, which dropped $98/oz during November or another 8.6%. Iron ore continues to edge higher, growing $9 per dry metric ton (dmt) to close $132.50/dmt. Battery minerals cobalt and lithium closed down 10.5% and 14.4% respectively during November.

Among the non-ferrous base metals, copper prices are nearing $4/lb, climbing 3.8% from $3.71/lb to $3.85/lb during November. The market has mixed feelings about the red metal. Inventories are currently low. According to the Copper Journal’s Monthly Price & Inventory Report, inventories held in exchange warehouses fell 14,557 mt to 218,212 mt. Copper held in Comex warehouses declined 2,055 mt to 17,831 mt; LME inventories fell 2,225 mt to 174,250 mt, and 10,277 was shipped from Shanghai warehouses, bringing the total there to a new low of 26,131 mt. Copper mining executives are pointing to the reduced inventory levels and signaling they believe prices could move higher in 2024.

According to a report title, Global Copper Mining-Relative Credit Analysis, Fitch is forecasting demand growth higher than historic trends and they see prices averaging roughly $8,000/mt through 2025 with tightly balanced markets based on copper’s role in energy transition. With copper closing at $8,464.50/mt at the end of November, this seems like a conservative forecast considering they said they expected supply to struggle to keep up given mining disruptions, declining grades, project cost increases and delays, and more projects in difficult jurisdictions.

Fitch also pointed out that most investment-grade miners have EBITDA leverage of less than 2.0x, with the exception of Corporación Nacional del Cobre de Chile (Codelco), the world’s largest copper miner. The firm said that Codelco’s large investment program and high cash transfers to the government frequently consume more than the company’s cash flow generation. Fitch expects Codelco to have FCF shortfalls through 2025 given high investments aimed at growing its production to 1.7 million mt/y.

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