Major mining stocks have taken a healthy bounce over the last couple of days, prompting some analysts to speculate that commodity prices may have finally found their bottom and mining companies can come out of the penalty box.
TeckResources (TSX:TCK.B) stock jumped 14% in a single day October 7, from $7.78 to$8.89 per share. It was up another 3% today (October 8) by mid-day.
Other majorminers likewise saw stock jumps, including Anglo American plc (LSE: AAL), whosestock rose 10%, while
Rio Tinto (NYSE:RIO) stock rose 8%.
Some of those moves were attributed to a bullish note fromMorgan Stanley, which said companies like Rio Tinto were overweighted, and whichpredicted a 19% increase in commodity prices by 2017, according to the Wall StreetJournal.
The S&P TSX composite index is up 800 points over thelast four trading days.
Kerry Smith, an analyst who covers Teck for HaywoodSecurities, said it’s too early to call a bottom for key commodities like ironand copper.
Although copper prices have risen 6% since hitting asix-year low in September, Smith points to a dip that they took today as signsthat it is still too early to call an end to a lengthy commodities bear market.
“I’m still expecting that metals will trade sideways for abit,” Smith said.
Smith said Teck’s stock bounce was probably more the resultof a US$610 million silver streaming deal announced Wednesday between Teck andFranco-Nevada Corp. (TSX:FNV).
Teck owns 22% of the Antamina copper-zinc mine in Peru.Under the deal with Franco-Nevada, Teck will receive an upfront payment ofUS$610 million on future silver production.
Smith added he thinks gold prices have stabilized and notlikely to go any lower.
“I think the gold price has probably bottomed and fell a bitmore confident gold is not going to go any lower,” he said. “But it could takea while to move higher.”
