Speaking about the outlook for base metals, Ryan Cochrane of Open Mineral shared how the situation has changed since the end of 2019.
The coronavirus outbreak could have a profound effect on copper and zinc in the first quarter of the year, according to Ryan Cochrane, head of research at Open Mineral.
Speaking with the Investing News Network at this year’s Prospectors & Developers Association of Canada (PDAC) convention, Cochrane talked about what this could mean for the rest of the year.
“The concentrate market for copper has turned around,” he said. “People are expecting the market to be widely in deficit for 2020.”
He also talked about zinc, which has been below the US$2,000 per tonne mark since the start of March.
“If you look at where zinc is today … if you look at what a mine has taken back in terms of revenue, this is comparable to levels in 2015 to 2016, when you had major cuts in supply,” he said. “It’s comparatively harder for miners right now, you are starting to see miners cut back.”
Discussing whether zinc prices have reached rock bottom, he said, “If it goes below US$2,000 and treatment charges stay where they are, I don’t think it is going to last very long, I think it is going to drive a turnaround.”
Speaking about the outlook for base metals, Cochrane shared how circumstances have changed since the end of last year. “By end of 2019 … I was quite bullish on copper … you had a tight concentrate market, profitability at smelters was very, very low, you could well have cutbacks and suddenly you would have a tight refined market,” he said.
With some now predicting a loss in Chinese copper demand of between 15 and 20 percent due to the coronavirus outbreak, it’s going to be quite difficult to make that up this year, Cochrane said.
Looking over to zinc, the expert said smelters had been very aggressive and were running their stocks low as they were anticipating plentiful supply in 2020.
“Zinc miners haven’t come back strongly after the winter months … and smelters don’t have enough supply and are looking to get it imported,” he said. “It’s an interesting time.”
Watch the video above to learn more about Cochrane’s thoughts on copper and zinc in 2020. You can also click here for our full PDAC playlist.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
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