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Not every broker is a believer in a commodities supercycle that will lift miners for years to come.
Analysts at UBS cut their rating on miners to market-weight from overweight after a strong first quarter for the mining sector.
They also downgraded
and
to neutral from buy.
Analysts led by Myles Allsop said the macroeconomic backdrop, and commodity demand view, still looks solid. “However, we see 2021 as the top of the cycle for most major commodities, not the start of a multiyear rally in commodity prices,” they said.
Unlike previous cycles, China’s demand growth isn’t growing rapidly. Credit growth is peaking and property policy is tightening. “We acknowledge that the demand base is much larger now that it was 10 years ago, but we expect demand growth to be materially lower over next 1-2 years than in the ‘supercycle’ years and supply is set to recover from Covid-disruption,” they said.
Vale,
they said, is well positioned versus the Australian iron ore producers, as it benefits from a weaker Brazilian real and higher volumes and lower unit costs.
