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What Factors Supported Teck Resources’ Dream Run in 2016?



Teck Resources

Teck Resources (TCK) has risen a whopping 556% YTD (year-to-date), placing it among the best-performing stocks of 2016. In this article, we’ll see what factors supported Teck Resources’ dream run in 2016.

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Higher zinc prices

Note that along with copper, Teck Resources also sells steelmaking coal and zinc. Teck Resources is the world’s third-largest producer of mined zinc. It has one of the largest integrated zinc and lead smelting and refining plants. Glencore International (GLNCY) is another leading zinc miner. While copper prices sagged for the most part of 2016, zinc outperformed the basic material space. Higher zinc prices supported Teck Resources’ 1H16 price action.

Higher coal prices

While zinc prices plateaued in 2H16, rising coal prices supported TCK’s price action. Teck Resources is the world’s second-largest exporter of steelmaking coal. It’s also North America’s largest producer, with the capacity to produce 28 million tons annually.

Coal has been falling due to the global shift toward renewable and clean energy. Furthermore, massive overcapacity and demand slowdown in the steel sector have been playing heavily on both iron ore and coking coal prices. However, coking coal prices have rallied handsomely in 2016 on Chinese capacity cuts. Rising coking coal prices supported Teck Resources’ 3Q16 price action.

Donald Trump’s election sparked a rally in base metals such as copper. Miners (RIO) such as BHP Billiton (BHP) and Freeport-McMoRan (FCX) rallied handsomely after the election results.

Simply put, the prices of all three commodities that TCK sells rose sharply this year, supporting its upward price action. Now, the question is this: Can the stock continue its dream run next year? We’ll explore this in detail in the next article.


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