Macroeconomic Themes ~ Copper Stock Picks - August 2021

Our Equities Trader, Joseph Raad, discusses macroeconomic themes for the month of August.

 

The current COVID-19 economic environment has seen the prices of most commodities surge to new all-time highs. One of the most notable performances has been that of copper. The global economic recovery, coupled with the mass adoption of lithium batteries in the EV sector, has seen the base metal’s spot price rally as much as 120 per cent from the crash of March 2020. 

 

 

Copper is heavily used in the manufacturing of a variety of goods, and the strong demand for the metal is perceived as a sign of economic strength. The primary catalyst behind such a move has been the production of electric vehicles in the global push for a green economy, as EVs contain approximately four times as much copper as conventional cars. 2020 saw the global electric car stock reach 10 million units, a 41 per cent increase from 2019, and a conservative EV outlook by 2030 suggests that such stock will reach approximately 150 million vehicles and account for 7 per cent of the global vehicle fleet.

 
Joseph Raad

 

“Copper is intrinsic in the EV production process and the demand for the metal is expected to increase as the sector interest does.” 

Joseph Raad, Equities Trader, BPC

 

 

 

The significant outpace in demand has left many analysts forecasting copper market deficits amid further declines in inventories over the coming years. Should scrap metal usage by refiners and smelters fail to increase at expected levels, the price of copper could move above $20,000 per metric ton. Furthermore, Joe Biden’s infrastructure plan, which is aiming to be passed through congress, could increase the demand of base metals, resulting in China no longer being the world’s primary source of strong copper demand.  

 

The outlook for copper in the foreseeable future is very positive and many ASX companies should reap the rewards of such strength in the underlying commodity price.


Stock Picks

 

Locksley Resources (ASX: LKY)

Locksley_Colour

Locksley Resources is an Australian exploration company incorporated in October 2018 for the purposes of identifying and assessing resource opportunities within Australia. The Company is focused on the acquisition, exploration and development of mineral resources projects which have the potential to deliver significant growth for Shareholders.
 

Hot Chili Limited (ASX: HCH)

Hot Chilli (HCH)

Hot Chili is an ASX-listed copper developer, headquartered in Australia and with operations in Chile. Their focus is copper mining, and in February of 2019, Hot Chili entered into a transformational agreement to acquire a 100 percent interest in a copper-gold porphyry discovery—Cortadera.

 

Oz Minerals (ASX: OZL)

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OZ Minerals is a copper-focused international company based in South Australia. Listed on the Australian Securities Exchange (ASX100), the company has a growth strategy that is focused on creating value for all stakeholders.

 

Sandfire Resources (ASX: SFR)

sandfire resources

Sandfire Resources is an Australian mining and exploration company that is listed on the Australian Securities Exchange (ASX:SFR). Sandfire has a strong track record of safe, consistent, and profitable production and a clear strategy to grow into an international diversified and sustainable mining company.

 

Where to from here?

Trading equities is all about having access to the right investment opportunities and making decisions based on accurate, unbiased information. Often, this means hours of research on a daily basis, keeping up with several ASX announcements, understanding economy-impacting events and regularly consuming broader news updates. If you're not an equities trader by profession, then it can quickly become rather overwhelming, especially once you have built a considerable-sized investment portfolio.

Our Equities Trading team, backed by our independent research department is the ideal solution for said situation. Our clients receive access to exclusive investment opportunities, daily ASX research reports, our expert weekly outlook on the Australian markets and direct access to our equity traders.

Trading with Barclay Pearce Capital is about building long-term returns, trust, confidence and a mutually beneficial relationship.

 

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Ben Weber

Chief Investment Officer

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Trent Primmer

Director of Trading

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Roberto Russo

Trading Operations
Manager

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Joseph Raad

Equities Trader

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Morgan McGuire

Equities Trader