Market Overview

China Slowdown Muddies Mining Waters; Deutsche Bank Still Positive On The Sector

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With China's economic slowdown creating muddy waters for metals and mining stocks, a Deutsche Bank analyst remains generally positive on the group.

"The focus is shifting to more company specific stories" from an emphasis on sector performance, analyst Jorge Beristain said in a note.

China last week posted an 8.8 percent gain in industrial production, although housing sales fell 10 percent.

Economists polled by Bloomberg recently forecast that China's economy will grow 7.4 percent in 2014, the slowest rate in 24 years.

China's imports of metallurgical coal, used in steelmaking, are projected to drop by more than 20 percent from last year, according to the Virginia Pilot newspaper.

Beristan prefers industrial to precious metals and expects gold to give back recent gains as the stock market, interest rates and the dollar move higher.

Because of lower exposure to the construction industry, Beristan favors base metals like copper, nickel and zinc over industrial commodities like coal and iron ore.

Among industrial metals, Beristan maintains Buy ratings on five companies, citing their cash flow outlook based on various on company specific initiatives and developments "and/or particular end market exposures."

The group includes Cliffs Natural Resources (NYSE: CLF) Freeport-McMoRan Copper & Gold (NYSE: FCX) Grupo Mexico S.A. de C.V. (OTC: GMBXF)

Thompson Creek Metals (NYSE: TC) and Vale SA (NYSE: VALE)

Among coal miners, Beristan's only Buy is CONSOL Energy (NYSE: CNX) and among precious metals, Barrick Gold (NYSE: ABX).

Downgraded from Buy to Hold by Beristan were Coeur Mining (NYSE: CDE) and Peabody Peabody Energy (NYSE: BTU).

Latest Ratings for CLF

Feb 2018Vertical GroupUpgradesSellHold
Feb 2018Credit SuisseUpgradesUnderperformOutperform
Jan 2018Vertical GroupInitiates Coverage OnSell

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Posted-In: Deustche Bank Jorge BeristainAnalyst Color Short Sellers Downgrades Reiteration Analyst Ratings


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