Thanks to bullish forecasts for global growth and increasing demand for commodities I feel the resources sector could outperform the broader market once again in 2018.
With that in mind, are these three resources shares in the buy zone today?
OZ Minerals Limited (ASX: OZL)
Last week copper prices climbed to a three-and-a-half-year high after data revealed that Chinese copper imports had increased strongly in November. Demand for the metal used widely in power and construction is expected to be strong again this year, putting Oz Minerals in a solid position to profit. This could make it worth considering an investment in the copper miner.
Syrah Resources Ltd (ASX: SYR)
Opinion remains divided on the future prospects of this graphite miner. Despite its shares rising strongly last year, Syrah is still the most shorted share on the ASX amid concerns that its Balama project will disrupt the supply and demand balance. While I do think that the rise of electric vehicle adoption means graphite demand should grow strongly, Syrah has kept the terms of its sales agreements confidential. As a result, I would suggest investors hold off investing until its results reveal the price it is commanding for the metal.
Western Areas Ltd (ASX: WSA)
Another company which is likely to profit from the electric vehicle boom is Western Areas. As well as lithium and graphite, many electric vehicle batteries contain nickel. With many countries, especially China, pushing for electric vehicle adoption for environmental reasons, I believe demand for nickel is likely to rise strongly over the coming years. I feel this could lead to the nickel producer's shares outperforming the market in the future.
