SCCO - Southern Copper: Miners Are Unlikely To Benefit From Electric Vehicles
2024-07-02 15:02:03 ET
Summary
- Copper's price has skyrocketed this year despite a weak manufacturing PMI, breaking a critical historical pattern.
- Chinese demand for copper may be driven by resource hoarding, as indicated by its significant inventory buildup over the past year.
- While electric vehicles could see copper demand rise, new technologies may upend that thesis. Lower demand for China's construction and infrastructure projects may offset EV or "AI" demand expectations.
- Southern Copper Corporation faces political risk as anti-mining politicians rise in power in Peru and Mexico amid a strong populist trend in Latin America.
- Southern Copper's valuation is difficult to justify even if we assume copper will sustain its current price point, as its production costs should rise over the coming years.
The price of copper (HG1:COM) is often seen as an indicator of economic conditions. When copper rises, many analysts see that as a bullish economic signal that manufacturing demand is growing faster than supply. Conversely, a sharp decline in copper's price is seen as a recession sign....
Southern Copper: Miners Are Unlikely To Benefit From Electric Vehicles