Metals 2013 and 2014 forecasts

Most metals have had a bad 2013 as far as prices are concerned, particularly the most watched ones – gold, silver and copper.

How will they fare in 2014?

A PwC report, ”Gold, silver and copper price report” explains what happened this year and what is likely to occur in 2014.

Gold, of all the metals, the ‘safe’ one

Gold, a metal seen traditionally as one of the safest investments, has had a turbulent couple of years. In 2011 prices exceeded $1,900 per ounce, and later fell to about $1,200 in the summer of 2013. Since then gold prices have struggled to rise.

The authors of the report describe gold’s prospects for 2014 as “challenging”. One year ago 88% of gold producers expected prices to increase over the coming year, compared to just 47% today.

Silver, 2013 a bad year

Silver has been the worst performing metal in 2013, falling in price by over 40%. However, prospects look good for silver for 2014, with just 9% of producers expecting prices to drop in 2014.

Copper, a stable 2014?

Copper started at $3.70 per pound at the beginning of 2013, falling to about $3 today. The report predicts a “stable” 2014 for this metal, and quotes 62% of respondents in the survey expecting copper prices to remain at current levels next year.

Global mining leader at PwC, John Gravelle said:

”While 2013 has been a tough year for miners, the industry has faith that fundamentals will recover. Gold, silver and copper prices may not reach record levels in the near future, but expect prices to increase alongside a stabilizing global economy.”

Keeping costs down and cutting back

Finding financing and managing costs are two major priorities for miners “amid less optimistic future price expectations.”

The report informs that:

  • 66% of mining companies see managing their spending among their top priorities for 2014.
  • 54% of miners believe that raising financing is ‘critical’.
  • 1 in every 5 respondents reports on plans to seek out either a merger or acquisition.
  • 53% of miners expect to go to the equity markets to raise capital in 2014.
  • 29% of miners expect to raise project financing in 2014.
  • 14% of miners plan to raise corporate debt in 2014.

Gravelle said:

“After years of spending on mergers and acquisitions and expanding operations with money generated from high metal prices, miners are now cutting back. Encouraging investors to return to the mining space will involve strict cost management strategies and responsible investment in production growth.”

“China’s economic growth is expected to remain strong as it executes its reform agenda – providing hope for mining companies that continue to sell their commodities to the world’s second largest economy. The gradual economic recovery in the US should also help increase long – term demand for commodities.”