HSBC trims price targets for miners

Volatility has been in the driving seat as a result of the recent gyrations in China’s stockmarkets, but certain commodities will outperform once the fog clears one of the world’s largest brokers said.

“We fully acknowledge the near-term risk-off sentiment as the market looks to avoid being caught the wrong side of big moves.

"Looking beyond, we believe that when the fog clears our favoured commodities of copper, zinc and nickel will outperform given their superior demand growth and specific supply-side issues. Commodity selectivity has never been more important,” HSBC said in a research report e-mailed to clients.

Copper prices seen rising

The team of analysts led by Ash Lazenby also sounded a hopeful note on copper prices, saying “despite disappointing year-to-date Chinese demand, allowing financial/speculative price action to dominate, we remain optimistic on the fundamentals and positive price momentum.”

Their year-end 2015 forecast for the price of copper was £2.85 per pound, £3.15 for 2016, $3.35 for 2017, $3.60 for 2018 and $3.20 over the long-term.

“Aluminium is at its cyclical low, while the Chinese incentive to export has closed. We see thermal coal prices consolidating at current levels,” the broker added.

In the same report HSBC trimmed its target prices on shares of Anglo American (to 990p from 1000p), BHP (to 1,270p from 1,300p), Glencore (to 360 from 365p) and Rio Tinto (to 2800p from 3050p).

Nevertheless, the broker upgraded its recommendation on Boliden and South 32 to ‘buy’ from ‘hold’.

“We upgrade Boliden and South32 to Buy following recent share weakness. BHP and Rio may be strong dividend plays, but we struggle to get more excited.”