A boom in commodity prices amid COVID-19 is now under way. Copper prices are trading at levels not seen since early 2013. Likewise with iron ore, ripping to an extraordinary US$135 per tonne. And oil prices are making a strong recovery and expected to be supported by OPEC policies.
Soaring commodity prices across the board has seen the S&P/ASX 200 Materials Index (ASX: XMJ) lift almost 4% on Thursday. Here's what big brokers have to say about S&P/ASX 200 Index (ASX: XJO) mining shares pushing higher.
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Diversified miners
Credit Suisse raised its BHP Group Ltd (ASX: BHP) share price target from $39.00 to $40.00 and retains an outperform rating. This compares to its closing price on Thursday of $41.25. After assessing the recent strength in base metal prices, particularly iron ore and copper, the broker sees significant upside in first half FY21 earnings.
IGO Ltd (ASX: IGO) is a diversified producer of nickel, copper, cobalt and gold. Credit Suisse raised its IGO share price target from $4.35 to $4.90 with a neutral rating. Its valuation was upgraded largely on the basis of the recent sale of 30% interest in its Tropicana gold mine.
Copper
Copper prices have been well supported by a significant increase in imports from China alongside disruptions to supply-side factors. OZ Minerals Ltd (ASX: OZL) is the main pure play copper miner among ASX 200 mining shares.
Credit Suisse raised its Oz Minerals share price target from $13.30 to $15.40 with an underperform rating. It cites higher copper prices for the price target increase, but struggles to see near-term opportunity given the recent share price appreciation.
Aluminium
Alumina Ltd (ASX: AWC) is a bauxite miner and alumina refiner. Its share price ran more than 25% in November to the $1.80 level but is still down 20% for the year.
Credit Suisse raised its Alumina share price target from $2.00 to $2.10 and retains an outperform rating. After reviewing the recent strength in base metal prices, the broker sees mid-single digit growth for aluminium through FY21-22. While risks remain, so does upside potential for the global economy.
The South32 Ltd (ASX: S32) share price was upgraded to $2.80 from $2.70 by Credit Suisse. The broker sees favourable operating conditions ahead, bolstered by strong commodity prices. It notes that the company is on track to deliver high single digit earnings growth in FY21, but could be 13% or more in FY22.
