Picture: THINKSTOCK
Picture: THINKSTOCK

Resources and platinum stocks on the JSE were sharply lower on Thursday despite a weaker rand as concern grew that commodity prices were at unsustainably high levels.

A weaker rand usually supports miners that export raw commodities because the dollar earnings increase, but emerging markets were generally weaker on the day ahead of US nonfarm payroll data on Friday.

The platinum index fell 2.66% and resources 2.07%.

Commodity supplies have risen since the beginning of 2016 as concern about waning Chinese growth subsided. Oil and iron stockpiles have grown, but prices remain relatively high.

Iron-ore prices have nearly doubled from levels below $50 per tonne in 2016. Copper, zinc and aluminium prices have also seen sharp increases.

"We saw broad-based weakness among miners on the day, led by stocks exposed to iron ore and platinum," said IG SA analyst Shaun Murison. Iron ore was boosted by US rhetoric on infrastructure spending and signs that the Chinese economy might be turning the corner. "However, there has not been enough demand increase to match the vast iron-ore supply."

After rocketing 50% in 2016, the platinum index has softened 3.45% in 2017. Platinums came under pressure in March after poor results from Lonmin and Impala Platinum.

Brent crude has nearly doubled from 2016’s low of $27.09 a barrel. After reaching a high of $58.32, the price has pulled back 8% so far in 2017. In late trade on Thursday Brent was 1.41% lower at $52.36 a barrel.

"Concern over rising US inventories and a stronger dollar appear to be the driving force of recent oil price weakness," said analysts at Nedbank Corporate and Investment Banking.

Ashburton fund manager Wayne McCurrie said mining shares had performed spectacularly well over the past 14 months. "But now, the focus has shifted to diversified mining shares at the expense of single-commodity and resource-related industrial shares."

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