Dr Copper
Mar 15, 2024
The copper price has been rebounding 11.4% since mid-October last year. This is a good sign as copper is often considered as Dr Copper taking the temperature of the global economy. If demand is strong and prices increase, global manufacturing activity is picking up as demand for industrial commodities increases with more copper needed for electrical cabling. There are 2 reasons why we should remain prudent: firstly, there are still production cuts in Chinese copper melting capacity and, secondly, iron ore prices, another important early indicator of a manufacturing upswing, are still weak. The longer term outlook for copper remains however solid as electrification of our economies accelerates due to technological advances and environmental constraints. Trading at a multiple of 10 times next year’s earnings, we continue to like the Swedish copper producer Boliden as its earning power starts to shine through with copper prices recovering.
