PERTH (miningweekly.com) – The market capitalisation of Western Australia-listed companies, which comprise the Deloitte WA Index, increased by 3.6% during February, to close the month at A$132.3-billion.

This was the first increase that the advisory firm had noted over the past eight months.

“We last saw an increase to the monthly Deloitte WA Index in May 2014, and since this time commodity price volatility in particular has driven the downward trend in the market capitalisation of Western Australia-listed companies,” Deloitte clients and markets partner Tim Richards said.

He noted that the increase during February was largely driven by the recovery in crude oil and coal prices over the period, which saw respective increases of 27.1% to $61.06/bl, and 13.2% to $71.45/t, as well as market capitalisation increases by resource sector heavy hitters Woodside, Fortescue and Iluka.

“Although crude oil and coal prices recovered during the month, it is unlikely that smooth sailing conditions have arrived just yet, as the global market needs to resolve issues of continued production increases which are driving oversupply in the market,” Richards said.
 
He added that Opec’s plan to refuse to cut output could have begun to work, with BHP announcing a 15% cut in shale oil capital expenditure for 2015, and US drill rig activity beginning to drop. As for coal, the fall in demand has led Australia’s largest miner, Glencore, to reduce exports by 15-million tonnes this year.

Precious metals performed poorly with the majority of those surveyed suffering losses, with the exception of palladium, which rose 4.3%. Gold decreased by 4.5%, and silver and platinum dropped by 3.4% and 3.6% respectively.

Recent reports have increased speculation that some precious metals may be overpriced, with a number of large global banks being investigated by the US Department of Justice in relation to potential pricing irregularities, Richards added.

Nickel’s price dropped 7.1%, with the Philippines effectively bridging the supply gap brought on by Indonesia’s ban on nickel exports. The ongoing debt saga in Greece and eurozone fragility concerns, and the possibility that demand for metals such as nickel and lead could continue to decline, helped to push lead prices down, also by 7.1%. 

After a weak start to 2015, copper regained some vigour – increasing by 6.9% – just as BHP announced planned cuts to production at Olympic Dam, in South Australia, over the next six months. Adding to this, news of an interest rate cut in China, the world’s biggest copper consumer, also drove up demand for the metal.

Uranium posted an increase of 5.4% as two of the world’s largest uranium mines, Olympic Dam and Rio Tinto’s Rössing mine, in Namibia, which account for roughly 8% of global production, faced supply disruptions.