“There are a whole number of issues and it’s going to come together, feeding into this supercycle,” said Tribeca Global Natural Resources portfolio manager Ben Cleary. “All of the banks are starting to put through consensus upgrades for commodity prices, and you’re starting to get those big long term upgrades.”
The potential supercycle bodes well for major diversified miners, which have already enjoyed the fruits of soaring iron ore prices.
BHP Group declared a record interim dividend of $US1.01 a share on Tuesday, 55 per cent higher than the previous dividend, but the miner could back that up with another bumper dividend in August if commodity prices remain elevated.
UBS is forecasting BHP will pay a final dividend of $US1.45, but acknowledged a return of $US2.26 is possible. In fact, UBS is forecasting BHP’s full-year payout will not fall below $US2 a share until at least 2025. That is equivalent to $US59 billion, including the dividend just declared.
“We’re confident in the outlook. While the world is a more volatile and uncertain place today, the global economy is rebounding strongly despite the ongoing effects of COVID-19,” said BHP Group chief executive Mike Henry on Tuesday.
Glencore’s Mr Glasenberg took the optimism one step further.
“China, we know is strong. Fifty per cent of the world’s commodities are all consumed in China and demand is strong there and looks like it will remain robust,” he said.
“[The question is] how the rest of the world develops and when does the fiscal spending occur in the US? And infrastructure spending, if that does kick in, then demand [will be] very strong.”
Spot prices for a number of metals are already at multi-year highs, driven by increasing demand at a time when supply is already struggling to keep up from under- or constrained investment.
Brent crude is trading at $US63.50 a barrel, its highest level in more than a year, driven by a commitment from OPEC and its allies to keep supply low in a bid to bring the market back into balance.
Copper prices are trading at an eight-year high amid fears of a market deficit, with production this year likely to be weaker given the impacts of COVID-19 on a number of major South American producing nations.
Tin has also shot to an eight-year high, soaring 17 per cent on Monday, over similar fears.