Commodities: Copper
Copper has been a standout in the recovery by the commodity prices over recent sessions, the industrial metals has already recovered 9% from its August low. We are looking for ongoing strength to ultimately break $US500/lb into 2022, assuming we are correct a great read through for the Resources Sector and in particular stocks such as OZ Minerals (OZL).
Copper stood out on the downside overnight falling -2.8% as investors disembarked the recovery story, a drop MM is looking to fade ideally below the psychological $US400/lb area – at this stage our preferred vehicle to increase our exposure to this industrial metal is OZ Minerals (OZL) who report this morning to make things interesting!
Assuming $US strength is about to unfold we would usually anticipate that commodity prices struggle, just as we saw on Friday simply because they are priced in $US, however if the FX move is based on an economic recovery declines are likely to be less dramatic. Conversely we must remain mindful that the likes of copper have more than doubled since March 2020 on the combination…
Copper like most key commodities is highly correlated to the $US hence if it does indeed take another leg higher MM would expect the industrial metal to fall another ~10% hence our initial relatively small purchase of OZ Minerals (OZL) for our Flagship Growth Portfolio.
