No End in Sight to Commodities Bull Cycle
By Jon A. Nones
30 Mar 2006 at 11:19 PM
St. LOUIS (ResourceInvestor.com) -- At the third annual American Stock Exchange Precious & Base Metals Investor Conference in New York today, Van Eck Global analyst Charl Malan gave a broad overview of the metals market. His synopsis: many more years to come in the commodities bull cycle.
Malan’s presentation focused on the supply and demand fundamentals of precious and base metals, and began by noting a lack of major discoveries in recent years as compared to the 1980s - but with increased exploration spending.
Neal L. Wolkoff, Chairman and CEO of AMEX cut the proverbial ribbon at the conference by saying, “It a very good market now in metals and business expansion of the like.”
Indeed with base and precious metals all hitting record highs today, the timing couldn’t be much better. So without further ado....
Supply
Malan wasted no time with making forecasts for the future – all bullish.
“We believe that is very unlikely that the current commodities cycle will come to an abrupt end due to a large influx of new supply. And even more so, if we consider the time lag associated between discovering a new deposit and the time before the metal comes to the market,” Malan began.
This almost mimics the point raised by veteran resource analyst Donald Coxe at the BMO Nesbitt Burns Global Resources Conference last month. Coxe said it now takes about eight to ten years to bring a mine online because of stricter regulations when it used to take only five years.
“We’re not going to have the knee jerk” on commodity prices like we’ve had before, Coxe said.
According to Malan, current inventories remain low at about an average of four weeks of global demand. And this tightness in the commodities market can be seen in copper especially, he said.
Copper inventories in 2001 average roughly 5.8 weeks, but in 2005, it was predicted to average just below two weeks of supply.
“Van Eck remains confident that the tightness in the market will remain not just because of a lack of below ground supplies but also due to the lack above ground inventories,” he said.
cont'd resourceinvestor.com |
