“The key theme in the resource space for 2017 will be volatility – amidst an overall improving tone in terms of demand and supply fundamentals.
One of the biggest drivers will be ‘The Trump Effect’ – how will the US economy and the world economy function during 2017, given Donald Trump’s ascendancy to the White House?
Certainly there’s been a lot of near-term enthusiasm generated in commodity markets as speculators gamble on an infrastructure-led spending spree, however I think this is overblown.
The biggest factor in the resource sector is still China – as it’s far and away the biggest single consumer of commodities in the world economy.
The key commodities to keep an eye on are gold, lithium, graphite, nickel and zinc.
Interestingly, the world’s major mining houses have relatively little exposure to these commodities and are still heavily reliant on iron ore, coal and copper for the bulk of their earnings.
I believe the hard-won recent gains for bulk commodities like iron ore and coal will subside during 2017, as supply is abundant and there have been temporary factors within China that have sucked in imports and supported price increases, but Chinese authorities will implement measures to temper further price rises.
On the other hand, solidly performing commodities this year like gold, zinc, lithium, graphite and nickel are set to outperform again during 2017.
Australian miners should also benefit from strong commodity prices in $AU terms.”
– Gavin Wendt – MineLife founding director and senior resource analyst