Mining investors enjoying their mince pies and mulled wine over the festive holiday may be well advised to make the most of it, some analysts say.
While some in the industry are willing to take a cheery view of prospects in the beleaguered sector in the year ahead, others are not so sure.
Commodity prices have been ravaged in 2015 as the Chinese economic downturn hit demand for staples such as copper, iron ore and zinc.
The crisis has sparked radical cost-cutting moves by the sector's giants, such as Anglo American’s decision to axe dividends this year and next.
Some analysts are glass half-full types, saying commodity prices are bound to bounce back eventually.
But the glass half-empty mob says the industry - and investors - need to adjust to "the new reality" of low prices and sluggish demand.
The commodity price boom of the last few years came about when China's industrialisation met 25 years of under-investment in the mining industry.
Some experts say it may have been a one-off and the industry could be returning to pre-boom norms.
Independent analyst Andy Xie believes the iron ore industry is set to become characterised by low prices, stable margins and low growth, according to the Australian Financial Review (AFR).
Xie told the AFR that Chinese demand for steel was dropping and iron ore prices could stay south of US40 a tonne in 2016.
Iron ore, priced at US$180 a tonne not so long ago, was worth about US$10 a tonne just over 25 years ago.
"The rise was an exception and we're back to the old normal," the AFR quoted Xie as saying.
Last week, rating agency Moody's downgraded Glencore to Baa3 from Baa2, blaming the move on a pricing environment it believed would remain unfavourable in 2016/17.
Moody's said in a note: "Today's downgrade of Glencore's ratings to Baa3 reflects Moody's view that market conditions in mining will not improve for a prolonged period of time."
The agency also downgraded rival Anglo American (LON:AAL) due to its weakened leverage, or debt, profile and a greater risk that commodity prices would depress earnings further.
A vice-president at Moody's specialising in AAL, Elena Nadtotchi, said: "We have downgraded Anglo American's ratings to Baa3 primarily because of its weak leverage position and the increased potential for further earnings deterioration."
INVESTOR GLOOM
It is not difficult to understand investors’ gloom given the turmoil that has engulfed the sector in the last few months.
Copper prices have fallen to six-year lows of about US$5,600 a tonne as global economic fragility and uncertainty have hit the construction and energy industries in China and elsewhere.
SP Angel sees the price dropping slightly to about US$5,500 in 2016 before gradually rising to US$6,000 in 2017 and US$6,500 in 2018.
But the broker’s analyst Sergey Raevskiy said US$6,500 was “not such a bad price” relative to the US$2,000 it was trading at 15 years ago.
Deutsche Bank said the commodity price fall had been larger than expected and it had downgraded its expectations for most industrial commodity prices.
Deutsche's analysts Rob Clifford and Anna Mulholland said: "We think it is too early to call the bottom, but supply cuts are gaining momentum, especially in oil, and we believe the end is in sight for the vicious commodity – fx downward spiral.
"We think 2016 will bring a flurry of corporate activity including bankruptcies, raising of equity capital, asset sales and M&A, all signs that the commodity cycle is getting closer to finding a floor."
"We have adjusted our target-setting framework to favour strong balance sheets and effective strategies. Actions speak louder than words.”
Analysts at GMP Securities in Australia said the supply side of the industry has been slow to adjust output to reflect the new reality.
"At current price levels, we feel there are many unprofitable operations and the incentive to bring new production online is non-existent," they said.
"As a result, we believe supply side cuts will start to become more pronounced. In fact, we are now seeing companies cutting production.
"As the process gains more speed, the oversupplied market will correct – a process that could take a couple of years."
IN A MESS
The commodity slump has caused mining companies, particularly smaller players, to shelve projects, seek partners or even sell themselves to rivals.
International Ferro Metals put South African subsidiary IFMSA into administration last month due to the collapse in steel prices and administrators are now looking to sell it to Samancor Chrome before a February 15 deadline.
Another South African group, Lonmin (LON:LMIN), last month confirmed a US$407mln rights issue to help it cope with weak platinum group metal (PGM) prices.
Deutsche has downgraded Lonmin to 'sell' after reducing its expectations for PGM prices by up to 30% in response to the weaker rand.
But others have rode the downturn relatively well, such as lithium explorer Bacanora Minerals (LON:BCN), which hopes to cash in on the growing market for lithium batteries for computers, mobile phones and cars.
Raevskiy said the impact of the downturn was likely to vary depending on where miners operate, what commodities they deal in and the strength of their finances.
“Some companies have low debt and low costs while others are in a mess,” he said.
At the very least, analysts are advising mining investors to put their cash in other sectors as well.
Hargreaves Lansdown analyst Adam Laird said: “Our message is, be cautious. There are reasons to hold stakes in the mining sector, but don’t focus solely on it.”
*First published December 31 2015