Unexpected headwinds keep commodity prices lower for longer – by Henry Lazenby (MiningWeekly.com – March 7, 2016)

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TORONTO (miningweekly.com) – A faster-than-expected slowdown in demand for commodities in 2015 has placed a damper on broad-based commodity price recoveries in 2016, compounded by lacklustre global economic growth and record inventories, which will take time to work down as production cutbacks and mine closures take effect.

Analysts representing the world’s top market intelligence firms were talking about commodities and the market outlook in Toronto on Sunday, on the first day of the yearly Prospectors and Developers Association of Canada’s convention – the largest mining show on earth.

Kicking off the afternoon session was Randgold Resources chief executive Mark Bristow, who outlined future strategic paths for mining companies in today’s new environment. He examined the challenges inherent in reconciling the industry’s essentially long-term nature with the market’s short-term demands and explained that the definition of growth was not immutable but changed from stakeholder to stakeholder and at different points in the price cycle.

Bristow also suggested that the scene was set for new entrants into the industry, whose fresh perspective should give them a significant competitive advantage over companies still encumbered by traditional thinking.

NICKEL

Wood Mackenzie principal nickel analyst Andrew Mitchell explained that 2015 was worse for nickel from a demand perspective than 2014, and that 2016 looked even poorer from a price perspective, as demand remained lacklustre. In 2015, demand grew by only 0.9%.

Mitchell pointed out that there were not as many nickel mine closures in 2015 as originally expected, as miners were able to lower costs – boosted by lower oil prices – and because the nickel price did not quite move low enough for long enough to push higher-cost miners out.

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