Global Industry Overview - Mining Mid-Year Update: Key Themes For 2016 - SEPT 2016
We have reviewed our key themes for 2016, which we outlined at the end of 2014 ( see 'Global Mining: The Five Key Themes', December 17 2015). Thus far, most themes are playing out or else still in play.
Theme: Crisis And Consolidation For Producers And Traders
Description: "Although we forecast that metal prices will stabilise in 2016, mining sector companies will remain under significant pressure due to declining profit margins. We expect to see miners increasingly surrender to a 'lower for longer' price outlook, which will result in further significant divestment of assets, output cuts and bankruptcies. Meanwhile, many small and mid-tier miners will face crisis. This trend will be exacerbated by the fact that there is increasing potential for an EM corporate debt crisis in 2016, given the parlous state of high-yield bonds in the US, rising dollar interest rates, slow growth, and elevated EM private sector leverage."
|Gold Miners To Escape Hardship|
|Select Equities & Indices, Rebased|
|Note: June 2015 = 100. Source: Bloomberg|