When crisis subsides, commodities to see significant gains
While mining commodity trends have recently indicated a sharp drop in metals and mining stocks, strong Asian demand growth and structurally short supplies may indicate that when the economic storm passes, the mining outlook could quickly turn upward, according to the Financial Post.
In September, a pullback in commodities brought down the S&P/TSX Mining Index 33 percent amid weakening mining currencies such as the Canadian and Australian dollar and the South African Rand. The European debt crisis is also expected to influence mining trends in the near future, but according to metals and mining analysts at Credit Suisse, the true indicator of future commodities trends is industry-specific economic momentum, according to the news source.
In the past two months, global downturn has had very little impact on the mining markets of China and the United States, the analysts said. Once European policymakers get the region's financial system under control, it is likely that mining commodities will continue their 10-year growth into 2012.
Even the recent massive shortfalls in industrial metal imports are likely to trigger aggressive restocking in China as soon as financial order is restored in the west. Due to solid Chinese demand, Credit Suisse says it will continue to hold a relatively positive outlook for mining commodities, according to the Post.
Analysts expect the mining outlook of coal to be the strongest, with prices expected to soar in the coming years.
Coal mining has shown to be especially booming despite many of the world's major markets teetering on a second recession. According to the Jakarta Globe, Atlas Resources has announced it plans to raise $167 million in an IPO to expand its coal mines in Indonesia.
Of the total investment, $106 million will be used to build new infrastructure at its Sumatra coal mining operations in Muba and Oku, with total capacity expected to top 2.5 million tons once the expansions are completed.
"We are optimistic because Atlas has an interesting investment scheme and growth prospects," said Moleonoto The, managing director of Indo Premier Securities.
Credit Suisse analysts also announced that gold will undoubtedly continue to make up for recent losses by the end of 2011. The firm boosted average gold price forecasts for 2012 to $1,850 per ounce, up from the originally expected $1,540, according to the news provider.