Commodity Stocks Making Their Way To The Top

  • Jul 03, 2020 AEST
  • Team Kalkine
Commodity Stocks Making Their Way To The Top

Summary

  • Commodity-related stocks have been under a lot of turbulence since the onset of the year 2020 with some commodity-based stocks such as gold and iron ore performing strongly, while that related to consumption-based commodities such as oil and base metals tumbling.
  • However, while gold and iron ore stocks have been riding on a bull ride, base metals related stocks such as Emerald Resources NL (ASX:EMR), Metals X Limited (ASX:MLX), have been emerging as top performers over an impeccable rally in copper prices.

Commodity stocks have been active in the exchanges in the wake of increased volatility on the commodity front with gold and iron ore stocks riding a bull rally over widespread economic conundrum due to COVID-19 outbreak while base metals stocks plunging considerably.

However, while gold and iron ore stocks have somewhat maintained their recent gains until now, base metals related stocks such as of copper and nickel mining companies are showing a considerable rise since the onset of the second quarter of the year to closely match the performance of gold and iron ore related stocks.

Also Read: Top Five Metals & Mining Performers with Returns More Than ASX200

Gold and Iron Ore Stocks

Gold has been the commodity of the year so far with prices surging considerably since the onset of the year 2020 amid widespread panic and falling risk appetite on the equity front across the globe. A considerable surge in gold prices has supported the share of ASX-listed gold mining companies, providing a strong return to shareholders.

However, in the middle of a continuous rally, the gold spot halted for a while and started showing some sign of correction over the growing optimism of the market concerning global economic growth.

To Know More, Do Read: Gush for Gold; How You Should Plan to Play The Consolidation?

However, soon the emerging second wave of infection shattered the market optimism and the market participants sought the safe haven once again to safeguard their portfolio.

To Know More, Do Read: Gold Vaults to Highest Levels Since October 2012; Trade Trends and Data Divergence

Despite a slight drop in prices of ASX-listed gold stocks, some of them are yet emerging as top performers with some even delivering higher return as compared to gold.

Gold stocks YTD returns

On following the above chart, it could be seen that ASX-listed gold stocks have provided a strong return since the onset of the year 2020 with Saracen Minerals Holding Limited (ASX:SAR) providing a total YTD return of 71.3 per cent, while others such as Northern Star Resources Limited (ASX:NST), Newcrest Mining Limited (ASX:NCM) closely tracking the total YTD returns of 16.56 per cent provided by gold with a total return of 26.66 per cent and 8.35 per cent on a YTD basis, respectively.

Iron Ore Stocks- The Rally Runner Up

Apart from gold, iron ore has also been the top-performing commodity for the year so far with prices rallying considerably to reach a new 52-week high.

To Know More, Do Read: Iron Ore- The Rally From 15-Week High to a 52-Week High

The surge in iron ore prices has been largely supported by the supply disruption emerged across the global front due to the impact of restrictions imposed by various governments to contain the spread of COVID-19, and challenging weather conditions in Australia due to Tropical Cyclone Damien, and heavy rainfalls in Brazil.

To Know More, Do Read: Iron Ore Exports Cross Three Digit Mark, would it Sustain?

The surge in iron ore prices has fuelled ASX-listed iron ore stocks, prompting them to emerge as top-performing stocks so far.

Iron ore stocks YTD returns

ASX-listed iron ore stocks such as Fortescue Metals Group Limited (ASX:FMG) have rallied considerably to make it to the top-performing list with FMG delivering a YTD return of 46.78 per cent total return. Likewise, many ASX-listed iron ore stocks have followed the same trajectory.

However, the YTD return of these stocks have been somewhat less except FMG, thanks to a recent splash in the stock, taking it to a record high, but ASX-listed iron ore stocks are still in the top-performing stocks bucket over the recent gain since the onset of the second quarter of the year 2020.

To Know More, Do Read: Iron Ore Stocks Losing Charm Over Soaring Supply

Base Metal Stocks Making Their Way to The Top

In the recent past, there has been a considerable rally in copper prices, leading to a sentiment splash in ASX-listed copper stocks.

Copper prices have climbed the price ladder swiftly with copper cash surging  ~ 30.76 per cent from the level of USD 4,617.5 per tonne (intraday low on 23 March 2020) to the current high of USD 6,038.00 per tonne (as on 30 June 2020) on LME.

The COVID-19 outbreak and weather challenges across Peru have impacted production across major mines, leading to a decline of 25 per cent in March 2020, with the first quarter production plunging by 12 per cent. This decline across Peru had a considerable impact on the global mine production, which slipped by 2.5 per cent in March 2020.

The decline in the global copper production along with falling copper inventories across LME supported the share price of ASX-listed copper stocks, which have now emerged among top performers.

Copper stock returns

On the above chart, it could be seen that copper stocks have been under an impeccable rally and strong returns from the onset of the second quarter till now with Emerald Resources NL (ASX: EMR) delivering a total return of 85.48 per cent, while OZ Minerals Limited (ASX:OZL) delivering 57.82 per cent for the same period.

In a nutshell, commodity stocks have witnessed a lot of turbulence since the beginning of the year 2020 over increased volatility on the global commodity front; however, while some commodity-related stocks such as gold and iron ore stocks have been consistently performing strongly amidst stormy market, base metals related stocks are among top performers.

 


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