An oversupply in commodities and a strengthening rand makes it unlikely mining shares on the JSE will repeat 2016’s strong performance in 2017. Global commodity prices made a sharp correction from highs in February, led by iron ore tumbling from more than $94 per tonne to $50. It has now stabilised at about $60. "Investors were too excited about last year’s bounce, with the imbalance between mining supply and demand continuing," said Aeon Investment Management portfolio manager Jay Vomacka. The JSE’s resources-10 sector is down 6% so far in 2017, having gained 26.4% in 2016. The platinum index has lost 7.3% and the gold index has dropped 3.15% after gaining 28.8% in the same year. The rand has firmed 7.5% against the dollar so far in 2017, from 11.2% in 2016 after having lost 33.8% in 2015. Despite a lack of profitability among platinum producers, companies have been reluctant to close mines, Bank of America Merrill Lynch analysts said on Monday. The upside for the sector was limite...

BL Premium

This article is reserved for our subscribers.

A subscription helps you enjoy the best of our business content every day along with benefits such as exclusive Financial Times articles, ProfileData financial data, and digital access to the Sunday Times and Times Select.

Already subscribed? Simply sign in below.



Questions or problems? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now