âWinterâ approaches for base metals equities, warns Haywood report
![](http://editorial.glacierrig.com/wp-content/uploads/2022/08/Base-metals-price-performance-Q2_-Haywood-1024x599.png)
“Overall, we look for most base metals producers to reflect weakening metals prices, as negative provisional price adjustments will impact results,” wrote the analyst in a note to clients.
Haywood also expects ongoing inflation pressure to impact costs materially, which continued at an annualized 8.7% rate (CPI) for the June quarter, including WTI crude oil (up 14% quarter-on-quarter) and diesel (US Gulf Coast Ultra Low Sulfur Diesel Prompt Spot index) up 32% q-o-q.
“As a result, we believe operating mine costs will continue to increase in the quarter. On the other hand, we note that operating conditions were more favourable for some companies, which will help mitigate the impact of inflation and metals prices,” said the analyst.
Average prices improved sequentially in the June quarter for zinc, closing at $1.78 per lb. versus $1.49 per lb. in the first quarter, and nickel gained to $13.16 per lb. versus $12.15 per lb. three months earlier.
However, the copper price declined 21% over the prior three months to $3.71 per lb. The zinc price fell 13% q-o-q to $1.38 per lb.
“Since the end of 2Q22, the price deterioration has intensified. So far in 3Q22, copper is down -10% to $3.34 per lb. – the lowest level since late 2020, zinc is down 12% to $1.21 per lb., and nickel is down 13% to $9.27 per lb.
The softer metal prices weighed heavily on the underlying equities.
![‘Winter’ approaches for base metals equities, warns Haywood report](http://editorial.glacierrig.com/wp-content/uploads/2022/08/Base-metals-price-performance-Q2_-Haywood-1024x599.png)
“Base metals equities gave back their gains from previous quarters, as the Global X Copper Miners ETF fell 35% q-o-q, the S&P/TSX Global Metals index fell 34% q-o-q, compared to the S&P 500, which fell 17% q-o-q, and the S&P composite index, which dropped 14%,” said the analyst.
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