Canadian mining equities battered by low prices and weak demand, says Ernst & Young
EY's The Canadian Mining Eye: Q3 2015 report highlights the significant concerns facing Canada's mining sector
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TORONTO—The Canadian Mining Eye index declined 17 per cent during the third quarter of 2015, which is a stark contrast to the second quarter of the year, which saw a four per cent gain.
This latest drop was even more substantial than the first three months of 2015, which saw a 1 per cent decline.
“Canadian mining equities continue to face downward pressure due to a fall in metal prices, weak macro-economic backdrop and weak Chinese demand,” says Bruce Sprague, EY’s Canadian Mining & Metals Leader. “But, with the U.S. dollar strengthening against the Canadian dollar, Canadian miners are expected to benefit as commodities are traded in U.S. dollars whereas production costs are incurred in Canadian dollars.”
The Canadian Mining Eye: Q3 2015 highlights the significant concerns companies are dealing with that have contributed to a further plunge in Q3 2015 prices, including:
- Gold was hit by lower imports by India, dropping 52% in September after a surge to meet festival demand in August.
- With economic pressures in Europe, the US and China, the pressure on gold was strong.
- In response to an economic slowdown in China, metals prices tumbled; copper was down 10%, nickel 13%, and zinc 16%.
The Canadian Mining Eye tracks Canadian mining sector performance of 100 TSX and TSXV mid-tier and junior companies with market capitalizations at the end, broadly falling between CDN$2.1b and CDN$160m.