PHL metal production may be dampened by weak global prices

WEAK ORE prices are expected to weigh on the value of the Philippines’ metals production, analysts said.

“We can expect this to continue… in the near to medium term,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

In a report, the Mines and Geosciences Bureau (MGB) said that the value of metallic mineral production dropped 12.8% during the first quarter.

The decline was mainly attributed to metal price declines and the slowdown in mine production.

The MGB said the value of metals fell to P51.8 billion from P59.4 billion a year earlier.

“The (first-quarter) production suggests that a challenging trend that may persist. The persistent low nickel prices, coupled with adverse weather conditions impacting production, are significant factors,” Mr. Limlingan added.

The value of nickel production declined 36% to P7.63 billion from a year earlier. Ore production fell 16.6% to 3.81 million dry metric tons.

Average nickel prices during the quarter dropped to $7.53 per pound from $11.78 per pound a year earlier.

“Given the current global economic uncertainty and potential oversupply in the market, it is probable that metal prices, particularly for nickel, will remain under pressure throughout the year,” he added.

Nickel and other nickel by-products made up 33.78% of the total value of production at P17.5 billion.

Michael T. Toledo, chairman of the Chamber of Mines in the Philippines (CoMP) said that a steady limonite market and increasing interest from Indonesian smelters could act as a tailwind for nickel.

“The Philippines also has the opportunity to fill in the gap caused by tensions in New Caledonia. Offer prices have improved and we have reason to be optimistic that these developments will translate into better transaction prices as well,” he said in a Viber message.

Global Ferronickel Holdings, Inc. President Dante R. Bravo said nickel ore prices may rise slightly during the second half of the year.

“We’re hopeful the nickel ore price will go up a little bit in the second half this year as we see the Chinese economy recovering very well and since the cooling off in (electric vehicle) sales seems to be temporary,” he said in a Viber message.

The Chamber of Automotive Manufacturers of the Philippines, Inc. said that it is expecting higher EV sales this year due to the 0% tariff treatment of imported hybrid EVs and plug-in hybrid EVs.

Gold production fell 14% to 7,178 kilograms. Its value dropped 3.55% to P26.95 billion. Gold accounted for 52.01% of the value of metals produced.

“Gold prices, which have risen owing to increasing demand from central banks worldwide, will still be largely affected by global geopolitics and the US response to inflationary pressures. Nonetheless, the long-term prospects of gold as an investment and store of value are very positive,” CoMP’s Mr. Toledo said.

The average price of gold increased to $2,070.05 per troy ounce from $1,889.05 a year earlier.

The MGB said that gold prices are expected to remain “upbeat” over the rest of the year amid the ongoing conflicts in the Middle East.

Additionally, Mr. Toledo said that copper demand may strengthen this year due to the global shift to green energy and limited supply.

“No new mining projects will come on-stream in the next few years. This would likely result in higher copper prices,” he added.

The estimated value of Philippine copper output decreased 3% year on year to P6.3 billion. Copper prices averaged $3.83 per pound during the period.

Production volume rose 4% to 67,582 dry metric tons. — Adrian H. Halili