Nice piece from mineweb (I should spend more time on this web site), click here.
Here's a data point:
"BMO's research found the price of many base metals has fallen well below the marginal cost of production 'with more than an estimated 80% of nickel and zinc, 90% of aluminum and 40% of copper producers currently underwater.'"
If prices don't improve we'll be seeing these producers go to zero. If I had more time I'd be trying to find the high-cost producers with weak balance sheets to short. Can anyone give me some pointers.
P.S., we are the interesting point in the cycle where metal prices are below the marginal cost of production. Earlier they were above the marginal cost. So, eventually we'll see metal prices rise. Here's BMO's comments on copper pricing:
"Potential reduced Chinese copper demand in the next several months has prompted BMO to project a 411-kt copper surplus and even lower prices this year. 'It would not be at all surprising to see the metal hit lows below the US$1.20/lb mark in the first quarter of this year. However, such prices would likely elicit additional supply cuts, setting the stage for a modest rebound once global growth turns.'"
This means that low cost producers that can keep going should, after a quarter or two, see their prospects rise. I'll be looking for that.