Liberum waded into the mining sector Tuesday with three downgrades and an upgrade.
The broker believes the market has over-estimated the price support for iron ore and underestimated it for platinum group metals (PGM).
So, it has moved to ‘sell’ on Rio Tinto (LON:RIO) and ‘hold’ on both Antofagasta (LON:ANTO) and KAZ Minerals (LON:KAZ).
On the upside, it is now a ‘buyer’ of Anglo American (LON:AAL).
As part of its industry overview, it said the iron ore market is now “visibly easing” as it predicted the price will head down towards a “marginal” US$50 a tonne from around US$120 currently.
“This is a slower deterioration than we previously forecast and will also be partially offset by improving premiums for lump and pellet,” it added.
Its copper prediction of US$3 per pound (static) is underpinned by concentrate restocking.
“We remain positive on palladium and rhodium on three-to-five-year view on the robust supply and demand fundamentals, but market pricing in more imminent falls,” Liberum said in a note to clients.
Coal, it added, is supported by “supply discipline” but it also noted, “there is nothing to suggest a sustainable price recovery above marginal cost”.
Diamonds, meanwhile “have shown signs of recovery from the lows”; however, Liberum said the outlook “will be very challenging for years to come as synthetics grab an increasing share of the market”.