The combination of increasing demand and a tight supply side in the metals and mining sector will lead to tightness in general in the commodities, and commodity prices are expected to rise into the second half, as a general observation on the global outlook, says Rob Clifford, an Analyst at Deutsche Bank AG London.
“On the supply side, we see the miners continuing to struggle to get tonnage out. Many will have flat output this year, and the absolutely eye-watering capex numbers that they’re talking about don’t actually deliver volumes really until next year, at the earliest, and beyond,” he said.
Clifford likes Rio Tinto plc (RIO) because he says iron ore remains a strong place to be in the sector. He favors Rio Tinto’s significant exposure to iron ore and its low-cost expansion capability in the Asia-Pacific region, next to the booming growth arena.
“We also think that China has GDP growth of 8.6%. So we’re constructive as a house on China. We see monetary policy in China easing to help drive that particular growth. So overall, we see some pickup in global demand into the second half of the year,” Clifford said.
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