Signs of green metals comeback

Key points:

• Copper prices surged 14.3% since late October 2023 and 5.3% this week due to production cuts by major miners, shutdown of Cobre Panama mine (world's largest), and expectations of global economic growth.
  
  
• Lithium carbonate, a key battery compound, prices are rising on tightening supply and showing signs of recovery after a downturn in late 2022. Rising prices reflect a healthier supply-demand balance and lithium demand is expected continue rising as EV market growth is still high in the coming years.

Copper prices rally 5.3% this week

After months of steady production cuts from miners such as Anglo American, Rio Tinto, Vale, and Teck in addition to the shutdown of Cobre Panama, the world’s largest copper mine in Panama, the market has gone from production surplus to a deficit. Expectations are also building in the market that China’s economy will continue to be supported by government stimulus and that the global economy is not slowing down. As a result high grade copper futures are 14.3% higher since late October 2023 and 5.3% higher this week alone.

Key risk in the short term is falling iron ore prices sending a mixed signal for industrial metals. Another risk to consider before investing in copper miners is increasing government intervention such as what happened to First Quantum Minerals that had to shut down its Cobre Panama copper mine.

For those that want exposure to copper there are several options ranging from copper futures (E-mini copper contract value is $51,275) or copper CFD (contract value is around minimum $412). There are also copper miners (note no pure copper miner exist in the world; they always mine something else such as gold and silver):

• Antofagasta
• Ivanhoe Mines
• Southern Copper
• Freeport-McMoRan
• Zijin Mining Group

Or ETFs covering either underlying copper futures or copper miners such as:

• WisdomTree Energy Transition Metals
• WisdomTree Copper
• iShares Copper Miners UCITS ETF