ASX Copper Stocks and ETFs to Watch Amid Rising Copper Prices
Copper prices soared to a 22-month high
After the global copper mine supply was impacted at the end of last year, as global manufacturing demand showed signs of recovery, copper mine supply reduction combined with stronger-than-expected demand, and copper prices rose strongly.Recently, the price of copper has been rising steadily and has attracted market attention. The LME copperfuturesprice has reached its highest level in 22 months.
I believe there is still potential for copper prices to continue rising, and here are the reasons.
I. The US economy has performed better than expected, with the ISM Manufacturing PMI index returning to above 50 after 16 months.
Historically, copper prices have closely followed manufacturing PMI data, reflecting its commodity nature. The market's super-expectations for the US economy will drive new expectations of economic overheating and re-inflation, and when global manufacturing begins to replenish inventory, demand for core commodities such as automobiles, electronics, home appliances, and real estate chains will often drive up copper prices.
II. The demand for copper is booming due to energy transformation and AI technology.
In addition to its wide application in basic construction and industry, copper is also used in new energy fields such as batteries, wires, and charging stations, and is known as the "new era of oil", which coincides with the current energy transformation trend. In AI data centers, copper is a necessary element for power distribution equipment and grounding interconnect devices. With the rapid development of AI technology, data centers will also become a new growth point for copper demand, thereby driving up copper prices.
III. As the world's largest consumer of metals, China's enthusiasm for purchasing industrial metals has not decreased but increased, ensuring a certain level of total demand for industrial metals worldwide. Driven by exports, China's manufacturing investment has significantly rebounded, with a YOY growth rate of 9.4% in the first quarter of 2021, especially in emerging industries that consume more copper.
IV. Currently, copper is in a "supply shortage" situation.
As copper is a cyclical industry, it has generally been tight in the past decade, with the average copper grade of a few major producing countries dropping by about 25%. At the end of last year, Panama ordered the closure of a giant mine owned by First Quantum Minerals Ltd., which meant a reduction of about 400,000 tons of copper supply from around the world each year, which first exacerbated concerns about copper mines and refined copper production. After Anglo American plc announced a production cut of about 200,000 tons, the supply prospect for copper has further tightened.
During a meeting in Beijing, executives from 19 leading smelters collectively decided to implement capacity management measures, including rearranging maintenance schedules, cutting back on production runs, and postponing the initiation of new projects. However, they have not opted for a unified reduction in output. This decision came as the industry is facing a substantial decrease in treatment and refining charges, pushing fees close to negligible levels.
Top ASX Copper Stocks and ETF to watch
The surge in copper prices will also provide a boost to miners, driving up stock prices. Against that backdrop, the top ASX copper stocks have put on impressive year-to-date share price performances. The list below outlines the top gainers:
Year-to-date gain: 78.62 percent；
Bougainville Copper is working to reopen the past-producing Panguna copper complex, which ceased operations in 1989. Panguna is considered one of the largest copper deposits in the world, and according to the company, its successful restart is viewed as a critical component of future economic independence for Bougainville, which is an autonomous region in Papua New Guinea. The country's government holds a 36.5 percent share in the company.
In early February, after much deliberation, Bougainville Copper was granted a five year extension to its Panguna mining licence, which will open the door for advanced-stage prefeasibility and feasibility exploration activities.
Year-to-date gain: 19.42 percent；
Sandfire Resources has an extensive portfolio of copper mines across the globe, including the MATSA mining complex in Spain, the DeGrussa copper-gold mine in Western Australia and the Motheo copper mine in Botswana. The company also has multiple development- and exploration-stage projects.
As a producer of the red metal, Sandfire’s share price has benefited from improving copper prices. It started out the year at AU$7.37 and rose throughout much of the quarter to reach a year-to-date high of AU$9.28 on April 9.
DeGrussa was placed on care and maintenance in mid-2023. However, output at MATSA, which the company acquired in February 2022 for US$1.87 billion, and from the newly commissioned Motheo copper mine, are taking the operation's place as major sources of copper production for Sandfire.
Comprised of three underground mines, MATSA operated at a record rate of 4.6 million tonnes per annum in the first half of Sandfire's 2024 fiscal year, which ended on December 31, 2023. Production came to 28,600 tonnes of copper and 42,600 tonnes of zinc for the period. Meanwhile, Motheo’s production during the same period exceeded its nameplate capacity for output of 16,800 tonnes of copper and 396,000 ounces of silver.
Year-to-date gain:15.25 percent;
Xanadu Mines is a copper and gold exploration company with several advanced exploration projects in Mongolia. The company’s flagship project is the Kharmagtai copper-gold project, and it's also exploring its Red Mountain porphyry copper-gold project, both of which are in the country's South Gobi region.
In the last quarter of 2023, the company released an upgraded resource estimate for Kharmagtai as part of its work toward completing a prefeasibility study for the project. The new resource estimate stands at 1.3 billion tonnes containing 3.4 million tonnes of copper and 8.5 million ounces of gold, which represents a 15 percent increase in contained copper and a 9 percent increase in contained gold. Xanadu is on track to complete a prefeasibility study and a maiden ore reserve estimate for Kharmagtai by Q3 of this calendar year. On March 25, the company began a 5,000 metre drill program to test five target areas at Red Mountain; it expects to release assay results from that work in June. Xanadu's share price climbed significantly throughout March.
Year-to-date gain: 16.22 percent;
Caravel Minerals is developing its namesake Caravel copper porphyry project in Western Australia, which it claims is “Australia’s largest undeveloped copper deposit and the fourth-largest copper discovery worldwide in the last decade.”
Caravel recently updated the mineral resource estimate for the project to 3.03 million tonnes of contained copper and an ore reserve of 1.4 million tonnes. The company is working toward completing a feasibility study by the end of this year. In its quarterly report for the period ended December 31, 2023, management states that the “project development timeline remains favourably in line with the forecast copper market supply deficit from 2026-2027.”Higher copper prices at the start of Q2 boosted Caravel's share price.
Year-to-date gain: 18.84 percent;
AIC Mines owns the high-grade Eloise copper mine in North Queensland, as well as a portfolio of exploration-stage copper-gold projects in Australia. Eloise started production in 1996, and the company is looking to expand the life of the operation through the development of the nearby Jericho deposit.
In Q3 2023, AIC Mines reported record production of 3,402 tonnes of copper and 1,820 ounces of gold in concentrate, which it followed with record production of 3,759 tonnes of copper and 1,890 ounces of gold in concentrate for Q4.
Positive newsflow and improving copper prices lifted AIC Mines’ share price. In late March, the company posted a new ore reserve estimate for Jericho, followed shortly by an announcement that drilling has begun at the recently discovered Swagman prospect, located between Eloise and Jericho.
Investors can also tap the trend with ETFs. ETFs provide access to a global basket of copper miners which stand to benefit from being a key part of the value chain. These have room for upside in the coming weeks.
WIRE seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Solactive Global Copper Miners Total Return Index.
United States Copper Index Fund seeks to track the performance of the SummerHaven Copper Index Total Return. The index is designed to reflect the performance of the investment returns from a portfolio of copper futures contracts on the COMEX exchange.
United States Copper Index Fund has accumulated $127.2 million in its asset base and charges 97 bps in annual fees.
Global X Copper Miners ETF offers global access to a basket of companies involved in the mining of copper. It tracks the Solactive Global Copper Miners Total Return Index and holds 38 stocks in its basket. Canadian firms take the largest share at 35.7%, while the United States and China round off the next two spots.
Global X Copper Miners ETF has managed $1.4 billion in its asset base while charging 65 bps in fees per year. It trades in a good volume of 508,000 shares a day on average.
Sprott Copper Miners ETF is the only pure-play ETF focused on large-, mid- and small-cap copper mining companies that are providing a critical mineral necessary for the clean energy transition. It follows the Nasdaq Sprott Copper Miners Index and holds 40 stocks in its basket. Canadian firms take the largest share at 33.7%, followed by the United States (29.3%) and Chile (10.8%).
Sprott Copper Miners ETF has accumulated $1.7 million in its asset base since its inception a week ago and trades in a lower volume of 28,000 shares. It charges 65 bps in annual fees.
iShares Copper and Metals Mining ETF offers exposure to 35 global copper and metal ore miners who may benefit from increased demand for this limited resource. It follows the STOXX Global Copper and Metals Mining Index, charging investors 47 bps in annual fees. Here again, Canadian firms take the lion's share at 33%, followed by the United Kingdom (14.8%) and Australia (11.8%).
iShares Copper and Metals Mining ETF has gathered only $5.1 million in its asset base and trades in a lower average volume of 3,000 shares a day.
Sprott Junior Copper Miners ETF is the only pure-play ETF focused on small copper miners, selected for their potential for significant revenue and asset growth by tracking the Nasdaq Sprott Junior Copper Miners Index. It holds 40 stocks in its basket, with Canadian firms taking the largest share at 54.4%. Australia and Peru round off the next two spots.
Sprott Junior Copper Miners ETF has AUM of $5.5 million and trades in a lower average daily volume of 3,000 shares. It charges 75 bps in annual fees and expenses.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
Read more
Comment
Sign in to post a comment
Specializes in the technology industry, Equity research analyst. Thank you for following!
619Followers
42Following
1728Visitors
Follow