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Materials Flat as Traders Hedge on Dollar View -- Materials Roundup

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01/12/2018 | 11:21pm CET

Shares of mining companies and other commodities were flat as traders hedged their bets on the outlook for the dollar.

The prices of copper and gold have risen sharply in recent weeks in part because of the weakness in the dollar. Sterling is trading at its highest level against the dollar since the U.K.'s 2016 move to leave the European Union. The euro rose against the dollar Friday after Chancellor Angela Merkel's Christian Democratic party moved closer to a coalition agreement with the Social Democratic Party. In the wake of the reports, the euro rose to $1.2144, its highest level since late 2014.

One brokerage said the rebound in the mining industry in 2017 is likely to continue during 2018. "The industry [is likely] to continue to benefit from ongoing supply constraints at existing mines, slowing supply growth from new production ramps and strong global demand," said analysts at brokerage Jefferies in a note to clients.

Separately, Jefferies analysts predicted a further strengthening in steelmakers' profit margins, helped by China's adjustments to its overcapacity issues. There is unlikely to be "a meaningful supply response to commodity prices for at least three years as project pipelines have been depleted and more exploration work is necessary to bring new capacity online."

While sugar prices could rise faster in 2018 than grain prices, the intermediate-term outlook for agricultural industry makes grain producers more attractive as investments, said analysts at brokerage Morgan Stanley in a research note.

Rob Curran, [email protected]

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