There could be some market-moving updates for industrial metals at the upcoming large-cap mining reporting season, with Anglo American PLC (LSE:AAL) selected by JPMorgan as its 'top tip'.
The season for the European miners kicks off with operational results for Rio Tinto PLC (LSE:RIO) on 17 October and fellow Anglo-Aussie giant BHP Group Ltd (LSE:BHP, ASX:BHP) and Antofagasta PLC (LSE:ANTO) the day after, with Anglo American and Fresnillo PLC (LSE:FRES) the week after, and Glencore PLC (LSE:GLEN) wrapping things up on the final Monday of the month.
China’s economic activity has recently stabilised, JPMorgan noted, "but not yet offering significant rebound for mining".
Recent manufacturing output benefiting from targeted policy support from Beijing has lead the bank's China economists to upgrade their forecasts for GDP growth this year back to around 5%.
The scope of further near-term fiscal policy support is uncertain, JPM's analysts noted, particularly for the sort of infrastructure spending that could support broad metals demand near-term, with the property market remaining "relatively mixed".
Over at Citi, analysts said they forecast the sector to see a pick-up in copper production, mainly from recovery in Chilean mines for Glencore and Antofagasta and in Peru for Anglo American, while iron ore and coal production volumes are likely to be around similar levels.
Iron ore however is "likely to be broadly flat", with Rio pre-reporting sequentially higher volumes, while BHP and Anglo American are likely to be "somewhat softer".
JPMorgan said Anglo American, which it has tipped at 'overweight', is its top pick in the sector, as it is trading at around a 20% discount to its sum-of-the-parts valuation, 4.0 times 2024 EBITDA, "the cheapest among its diversified peers".
"We also see a greater turnaround opportunity given sentiment is already weak for diamonds & PGMs as well as greater cost/capex improvement potential."
The analysts remain neutral on more iron ore dominant BHP and Rio Tinto.
Heading into the earnings season, JPM placed Norsk Hydro and First Quantum on 'negative catalyst watch' and downgraded Lundin Mining as prospects for mining investment in Argentina are "still potentially challenging".