CA - COPX: Copper Squeeze Could Stretch Beyond 2030

2024-04-30 15:49:23 ET

Summary

• The world is hurtling towards a copper deficit that could stretch for several years, potentially undermining zero carbon emission targets and threatening to inflate industrial costs.
• The current high interest rate environment discourages capital-intensive investments in developing new copper mines. While major producers have instead turned to acquisitions to build up their copper portfolios quickly.
• We see the potential for a surge in copper prices matching the magnitude of previous bull markets for copper, which potentially means another 38% gain from current levels to US$6.50/pound.
• Given that COPX valuations remain undemanding at around 15x Forward P/E, we reiterated our "Strong Buy" rating.

The Global X Copper Miners ETF ( COPX ) is enjoying a spectacular rally, closely tracking the surge in copper futures in recent weeks. In fact, since we initiated our bullish view on copper with a "Buy" rating on COPX back in October 2022 , COPX has gained 69% to date, outperforming copper futures prices, which have gained around 33% over the same period. We upgraded our rating on COPX to a "Strong Buy" in June 2023 ....

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