Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

3 Stocks To Watch As Copper Surges To Record Highs: 'Something Is Cooking In China'

Published 21/05/2024, 16:12
© Reuters.  3 Stocks To Watch As Copper Surges To Record Highs: 'Something Is Cooking In China'
ANTO
-
TECK
-
FCX
-
HG
-

Benzinga - by Piero Cingari, Benzinga Staff Writer.

Copper prices continue to reach new record highs daily, soaring to $5.17 per pound on Tuesday, driven by improving market conditions.

The metal has surged over 30% year to date, setting the stage for its best-performing year since 2010. Additionally, copper has jumped 28% in the last two months, marking its best two-month streak since April 2009.

The performance of copper miners has also been outstanding. The Global X Copper Miners ETF (NYSE:COPX) has achieved 12th positive weeks in the last 14, rallying 40% year to date.

Two primary factors are fueling the rise in copper prices: increasing demand from electrification and strategic stockpiling by China.

Electrification Demand Kicks In Bank of America analysts noted that “renewables, EVs, and other new uses of copper – such as data centers and AI – combined with supply-side issues are driving tight markets.”

The investment bank also highlighted that decarbonization efforts lead to higher metal usage, often replacing hydrocarbons with electrification, which translates to more copper usage.

China’s Strategic Stockpiling A significant dynamic in the copper market is China’s hoarding of copper.

Macroeconomist Andreas Steno Larsen highlighted in a recent post that China’s copper inventories are at an all-time high for this time of year.

“Something is cooking in China,” Larsen remarked on social media platform X. He explained that China typically uses its copper stock at this time of year, but instead, they are building their stockpile while copper prices surge.

Larsen suggests that China is gearing up its green tech capacity, predicting that European markets will be inundated with subsidized Chinese solar panels, EVs, and wind turbines through 2024 and 2025.

This strategic move has allowed China to secure a strong supply chain, challenging European companies’ competitiveness.

The economist warned that the upcoming weeks are going to be crucial for copper markets as the Yangshan Copper Cathode is now traded at a discount to LME spot, which is highly unusual.

The market will closely watch whether China decides to export copper, or if this stockpiling is a deliberate strategic move to dominate supply chains.

“We are betting on the latter,” Steno Larsen stated.

Top Copper-Linked Stocks Recommended by Bank of America Bank of America has identified three top copper-linked stocks for investors:

  • Antofagasta plc (OTCPK: ANFGF) as a volume-growth story.
  • Freeport McMoRan Inc. (NYSE:FCX) considered “a go-to blue-chip copper exposure.”
  • TECK Resources Ltd (NYSE:TECK): Following the sale of its coal assets, TECK has become a new, inexpensive copper “pure play” with growth options.
  • Read now: AI-Driven Rally Set To Expand To Power, Commodities, Utilities: ‘It’s Not Just About Nvidia Anymore’

    Image generated using artificial intelligence via Midjourney.

    © 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

    Read the original article on Benzinga

    Latest comments

    Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
    Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
    Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
    It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
    Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
    © 2007-2024 - Fusion Media Limited. All Rights Reserved.