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Mining shares are attractive as a relatively cheap ‘value’ sector, says Barclays

“Miners remain attractive as a relatively cheap ‘value’ sector exposed to growing demand,” Barclays Capital Inc said

Anglo American PLC -

Barclays said it was positive on the prospects for the European mining sector for the remainder of 2021 and lifted its price forecasts for iron ore, platinum group metals, cobalt and copper.

“Miners remain attractive as a relatively cheap ‘value’ sector exposed to growing demand,” Barclays Capital Inc said in a research note.

It named Anglo American PLC (LON:AAL), Brazil’s Vale SA (NYSE:VALE) and Glencore PLC (LON:GLEN) as some of its top picks in the sector.

“China demand looks well supported in most of the key commodity-intensive sectors, ie property, infrastructure, machinery and autos,” the analysts said, while “Western world stimulus shows no sign of abating”.

It raised EBITDA forecasts for 2021 by 19%, on a market cap weighted average, and 32% for 2022 after updating commodity price forecasts.

Iron ore prices remain well supported by strong demand and limited incremental supply over the medium term, it said, lifting its price forecast by 16% this year and 33% next year.

Barclays raised its price forecast for PGM member rhodium by 68% this year, the biggest commodity price revision, to US$22,858 an ounce. The forecast for platinum prices was lifted 18% this year and for palladium up 13%.

Copper saw its price forecast revised 11% higher as the metal continues to be in a deficit, although Barclays warned that it remained concerned about significant supply growth in 2022-23.

“If companies can consistently demonstrate a ‘virtuous cycle’ of rising commodity prices, rising cash returns, capex under control and constrained supply, we think they could attract a new class of shareholder and support a broader re-rating,” it said.

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