Deteriorating economic outlook and weak metal prices hurt second-quarter mining, S&P Global says

“[There is] a lot of volatility in the markets in the macro outlook, and that has certainly translated into some indexes going down in the first half of this year,” said Mark Ferguson, research director for S&P Global Commodity Insights, during a webcast.

In a broader context, the S&P 500 had its worst first half in 50 years. However, Ferguson said the weaker numbers translated into depressed stock market support for the mining industry throughout the period.

“The TSX Global Mining and ASX Metals and Mining indices fared much better in April, and this was supported by prices that remained at high levels in early April. But since then, those indices have also struggled,” Ferguson said.

The analyst noted that S&P’s series of monthly industry monitoring reports track the exploration sector in more detail and compile aggregate market capitalizations for about 2,800 publicly traded companies around the world. The June quarter saw a decline in the overall market capitalization of this group of companies despite the S&P Exploration Price Index, which is a basket of commodities for which exploration is a crucial component. “It remained relatively strong even in the June quarter, near all-time highs dating back to the June quarter of 2008,” Ferguson said.

He pointed to weakening stock market support for the sector, given the recent drop in metal prices.

“If we look at activity levels in the June quarter, we certainly saw weak stock market support for these companies. It hasn’t completely fallen off a cliff, but it’s definitely down from any the year 2021, and even into the second half of 2020. Gold has dominated for much of this period and is a dominant factor in exploration spending,” he said.

Edward N. Arrington