MS sees seasonal restock to bring metals & mining back into focus

Metlen Energy & Metals SA

19/09/2024 11:56

** As China's steel demand indicators disappoint, Morgan
Stanley says a seasonal restock would bring the metals & mining
sector back into focus
    ** Says, prospects of a meaningful demand inflection in
China remain limited in the absence of more decisive stimulus,
but sees a modest and seasonal pick-up in activity through
year-end
    ** Steel-making raw materials like iron ore and
metallurgical coal are trading into the cost curve, limiting
prospects of a sustained price decline from current levels, the
broker says
    ** Mining equities are pricing further price declines, which
MS sees as unsustainable 
    ** The brokerage's most preferred mining companies are
Endeavour Mining  EDV.L , KGHM  KGH.WA , Metlen  MYTr.AT , Norsk
Hydro  NHY.OL , Rio Tinto  RIO.L  (all "overweight"-rated)
    ** MS keeps "neutral" on Aurubis  NAFG.DE , Befesa
 BFSA.DE , First Quantum Minerals  FM.TO , Fresnillo  FRES.L ,
and Glencore  GLEN.L  
    ** It downgrades London-listed Chilean miner Antofagasta
 ANTO.L  to "underweight" from "equal weight" citing production
risks, a heavy capex cycle and a stretched implied copper price 
 
    ** The broker's least preferred stocks in the sector
("underweight"-rated) are Antofagasta and Boliden  BOL.ST , the
latter still challenged on operational/project setbacks and
unfavourable smelting exposure


 (Reporting by Marta Frąckowiak)
 ((marta.frackowiak@thomsonreuters.com))