Ann: Noosa Mining Conference presentation, page-10

Attended the Morgan Stanley Global Commodities Update today. I was there for Oil and Gas but took some notes on Metals at the same time.

The title and general theme of the update was FOMO. The idea being recent rallies in some commodities have been fueled by traders not wanting to miss out rather than fundamentals.

Gold

• Gold upgraded to buy.
• Offers a good long term structural hedge against the Fed cutting cycle.
• Expect an increase in rates tomorrow before a pause and cutting to begin in Q224 (.25) with greater cuts in Q324 (.50)
• Gold usually +15% in these types of cycle - more upside if Fed cut harder.
• Gold expected to strengthen even with a soft landing.
• Traders are bullish but waiting for the data to support expectations. So, market bullish, but not yet committed.
• Forecasting $2,200/Oz and above

Copper

• Near term Copper outlook is neutral (more bullish Nickel)
• Chinese reopening not as intense as expected for base metals. It was more oil driven. Expected demand growth of 3% this year given the Chinese don’t seem to be in any urgency to fill order books.
• Market gets to 8,000/t ($3.57 lb) and buyers come in to fill orders and price comes back off.
• Manufacturing and real estate order books are still weak.
• Most base metals expected to still be in surplus this year.
• Market needs a higher demand catalyst, which is expected in H2’24 when the Fed start their cutting cycle.
• Building & Construction expected to lead that demand.
• So H2 24 should start to see recapitalization into Copper and other base metals.
• Expect a recovery, but hard to see it rally in the short term due to soft fundamentals. They believe we’ve seen the low.
• Their research team can make a case for $10,300/t ($4.60 lb) by end of 2024.
• EOY range 8,300 – 9,100/t ($3.71 – $4.06 lb).
• Below $7,500 - $8,000/t ($3.35 – $3.57 lb) it has support as buyers will stockpile at that level.
• Copper a “sleeping giant and will come back with a vengeance”.
• Lots of investors who still believe in an unprecedent shortage, and it will likely break historical highs when the giant awakens, but it is more a 2024 story.

Good luck to all.