Barclays sees decent Q4 with seasonality tailwinds for European miners

Petra Diamonds

16/10/2024 11:36

** Barclays says European miners could have a decent Q4 with seasonality
tailwinds, near-term support for base metals from potential China stimulus and global
rate cuts
    ** Any benefits from Chinese stimulus are likely to be felt in a (modest)
acceleration in base metals demand from accelerating the equipment/appliance
upgrading program, with steel & iron ore demand largely unchanged, it says
    ** Global central banks moving to an easing cycle should benefit the mining
sector via restocking, recovering construction activity and a weaker USD, it adds
    ** The broker points out that copper, aluminium and metallurgical coal are
supported by supply side constraints, while it sees the gold bull market set to
continue as real yields decline
    ** Barclays notes the U.S. election outcome could be a negative catalyst if it
results in a step-change in China tariffs, as seen during Donald Trump's presidency
in 2018
    ** It downgrades Boliden  BOL.ST  to "underweight" from "overweight" on M&A and
project delivery risk, headwinds from zinc and copper treatment charge and refining
charge contract settlements into 2025, among others
    ** Its preferred "overweight"-rated names are Glencore  GLEN.L , Anglo American
 AAL.L , and Norsk Hydro  NHY.OL 
    ** Among precious metals, it highlights Endeavour Mining  EDV.L  and Hochschild
Mining  HOCM.L , citing their spot FCF yields  
    
 COMPANY                          RATING          OLD RATING   PT          OLD PT
 Anglo American                   overweight      n/a          GBP 26.00   GBP 27.40
 Antofagasta  ANTO.L              underweight     n/a          GBP 15.50   GBP 16.00
 BHP  BHP.AX                      equal-weight    n/a          GBP 24.00   GBP 25.50
 Boliden                          overweight      underweight  SEK 300.00  SEK 365.00
 Endeavour Mining                 overweight      n/a          GBP 24.00   GBP 29.00
 Ferrexpo  FXPO.L                 equal-weight    n/a          GBP 100     GBP 100
 First Quantum Minerals  FM.TO    equal-weight    n/a          CAD 17.00   CAD 18.00
 Fresnillo  FRES.L                equal-weight    n/a          GBP 800     GBP 685
 Glencore                         overweight      n/a          GBP 485     GBP 520
 Hochschild Mining                overweight      n/a          GBP 240     GBP 205
 Norsk Hydro                      overweight      n/a          NOK 87.00   NOK 89.00
 Petra Diamonds  PDL.L            equal-weight    n/a          GBP 0.39    GBP 0.39
 Rio Tinto  RIO.L                 overweight      n/a          GBP 57.00   GBP 62.50
 South32  S32.AX                  overweight      n/a          GBP 2.05    GBP 2.00
 Vale  VALE3.SA                   overweight      n/a          $16.00      $17.00
 
 (Reporting by Marta Frąckowiak)
 ((marta.frackowiak@thomsonreuters.com))