Deutsche Bank upgrades commodity forecasts, Anglo and Antofagasta

16th Sep 2014 09:42

Deutsche Bank has lifted its target prices for stocks across the UK-listed mining sector after upgrading most of its commodity price forecasts.As part of its review, it has lifted its rating for Anglo American from 'hold' to 'buy', raising its target price from 1,650p to 2,100p, and for Antofagasta from 'sell' to 'hold' with the target raised from 730p to 820p."As the dust is settling on mining growth post a period of frantic capital spending, it is a sensible time to study the remaining projects and long-term pricing outcomes," the bank explained in a research report.It said that it has lifted its long-term price forecasts for base metals on expectations of higher future capital and operating costs.Capital intensity and real costs should rise over the next 10 to 15 years due to a combination of "declining grades, ore body quality, higher rent take and raw input scarcity", it said."Our top three price upgrades are copper, lead and alumina with price increases of 16%, 12% and 10%, respectively," the bank said.Overall, Deutsche Bank said it remains "positive on the sector".The bank said: "Unfortunately for the majority of miners, these higher prices will not drop straight to the bottom line as they will face higher operating costs and operating currencies in this environment."The winners will be miners with existing low cost and long life assets that will benefit from a steepening of the cost curves."