Since the beginning of the pandemic, copper prices have seen some major lows and major highs.
As governments continue their economic recovery efforts, the spotlight has been on the red metal.
Thanks to its conductive properties, relative abundance, and recyclability, copper is key to industrial plans and environmental efforts.
Many people even refer to copper as the “green metal” because it’s vital to clean energy solutions, such as electric vehicles (EVs).
On top of being necessary for green technology, copper plays a major role in infrastructure planning.
Plumbing, wiring, and more require ample amounts of copper, which drives up its demand even further.
Despite demand for copper soaring, supplies are dwindling—and it’s not because the earth is running out.
There are still tonnes of copper buried in the ground, but new mining projects are facing increased regulations and taxes in some parts of the world.
However, if new projects are approved, you could capitalize on demand with the right copper investment.
Let’s take a look at the copper market and what you need to know to make a smart investment.
The Copper Market
The copper market is prone to volatility, as the past year has shown.
The pandemic shut down mining operations around the world, putting miners behind schedule.
This delay has caused supply issues that are still being felt.
You may have read or heard about a supply shortage in copper.
But It’s not that the Earth is running out of copper. There is plenty left.
In fact, only about .05% to 1% of copper ore is derived from copper deposits.
The other portion of copper in circulation is thanks to recycling.
So if the earth is not running short of copper, what is causing supply shortages?
Supplies Dwindle as Demand Rises
It’s not that we’re running out of the red metal—there just hasn’t been enough mined.
The current demand for copper is outpacing supply.
Many supply issues go back to pandemic conditions that saw a significant amount of mining operations shut down.
Even with working vaccines, conditions didn’t snap back instantly.
After all, copper needs to be found, mined, and refined before reaching the market, making it costly.
To have hope for keeping up with copper demand, mining companies need to expand current operations or explore new locations.
While expanding a current operation can add some additional supply, new mines will eventually be needed.
So why not just open new mines?
After copper prices took such a large hit in 2020, mining companies were reluctant to fund new mining operations.
Additionally, new operations can take over a year to come into production.
Combining all these factors has resulted in a supply that cannot keep up with demand.
Is Copper a Good Investment?
Copper prices are high, but that doesn’t mean they will stay high.
Right now, the high demand is not being met by the current supply, which explains copper’s high prices.
Copper is likely to stay in high demand for the near future, but that doesn’t mean prices will remain high.
However, when supply ticks up, those prices will likely take a dip.
Now, it won’t be a nosedive, but experts predict that we’ll see prices closer to where they were in 2019.
For this reason, copper as an investment can help diversify your portfolio so long as it’s not a significant percent of your portfolio.
The Red Metal Becomes the Green Metal
Copper is vital to green technology and infrastructure plans set by the Biden administration.
As EVs become more popular, the need for more copper becomes paramount.
For perspective, to construct 1000 EV batteries, you would need around 83 metric tonnes of copper.
But the US is not alone in efforts to construct more EVs and improve infrastructure.
China, the world’s second-largest supplier of copper and its top consumer, wants to dominate the EV market.
This has pitted the world’s top economies against each other for copper supplies.
The demand for copper won’t fade in the near future.
If you place the right investments, the competition for supplies can work out in your favor..
Market News: Southern Copper (SCCO) Dips More Than Broader Markets
Zacks Equity Research reported that Southern Copper Corporation (SCCO) closed at $58.51 during September 2021.
That was a steeper drop than S&P’s 500 end-of-day loss total: 0.91%.
This reflects SCCO shares losing 2.84% from mid-August through mid-September while the entire Basic Materials sector was set back by 5.7%.
While other investors might overlook the opportunity here—Dear Retail investors may want to be ready to bite.
Looking too closely at these near-term stock moves means you might miss the big picture.
And it looks like things could turn out pretty green.
That’s because Wall Street projections placed SCCO earning per share at $1.09 on their next report for a 67.69% year-over-year growth.
That totals up to 2.7 billion dollars in revenue. Juicy stuff, right?
But it got better. They actually hit $1.12 earnings per share.
Beating investor expectations shows that SCCO’s forward motion, in the face of macro-level supply issues, means that not only are they beating the odds, but they aren’t stopping anytime soon.
People like you with a nose for opportunity may want to take this chance to bulk up while SCCO shares are discounted.
Based on the judgment of industry experts, it may not last for much longer.
Best Copper Stocks in Q3 2021 to Buy
Freeport-McMoRan (NYSE: FCZ)
Headquartered in Phoenix, Arizona, Freeport mines for gold, copper, molybdenum, and more. Freeport had a stellar Q3 of 2021, with improvements in earning, revenue, and profits. The company pulled in $6.08 billion, up 58% from a year ago. In the same time frame, Freeport’s net income increased 329% to $1.4 billion and their profit margin was 23%, up from 8.5%, making it one of the top copper stocks to buy in Q2 2021.
Southern Copper (NYSE: SCCO)
Southern Copper is one of the world’s top copper producers. They recently posted their copper output totals for Q3 of 2021 at 245,146 tonnes. This total is slightly lower than the copper output for Q3 of 2020. Despite a slightly lower output for 2021, SCCO posted a net income of $867.6 million, an increase of 71.5% from their Q3 2020. The company attributes its increase in sales to strict cost control measures.
Glencore (OTC: GLNCY)
Glencore operates 150 mines around the world. They produce metals such as copper, cobalt, zinc, and more. The company’s copper production in Q3 of 2021 was 895,000 tonnes, a drop of 4% from the same period. On Friday, October 29th, 2021, Glencore reported that they expect their earnings before interest and tax to top 2.2 billion to reach 3.2 billion long-term guidance.
Stay Up to Date With the Copper Market—Join Dear Retail
Demand for copper doesn’t seem to be slowing down any time soon—this could be your next great investment opportunity. The best thing you can do for yourself is to stay up to date with the industry, and what better way to do that than joining Dear Retail. We are a community of like-minded investors who advocate for investing in the small-cap market. Click Here to Learn More about How To Invest in Copper.
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