Copper Prices at 2-Year High on Strong Manufacturing Data

Christel Deskins

Three-month copper futures on the London Metal Exchange (LME) gained 2.3% to $6,830 a metric ton on Sep 1 — the highest level since June 2018. LME Copper prices closed at $6,768 per metric ton on Sep 1, 2020. Surge in demand in top consumer China, improving manufacturing data and […]

Three-month copper futures on the London Metal Exchange (LME) gained 2.3% to $6,830 a metric ton on Sep 1 — the highest level since June 2018. LME Copper prices closed at $6,768 per metric ton on Sep 1, 2020. Surge in demand in top consumer China, improving manufacturing data and concerns over an impending supply crunch owing to the impact of the pandemic have been key factors behind the red metal’s rally lately.

Strong Turnaround

In the earlier part of the year, copper prices had taken a hit as the coronavirus outbreak in China resulted in the country implementing containment measures and shutting down production lines. This severely impacted demand for this widely used metal. As the outbreak rapidly took the shape of a pandemic, the consequent slump in global economic activity and plunging oil prices led copper prices plummeting to a low of $4,617.50 on Mar 23, 2020.  However, copper has regained lost ground, and is currently up 47% compared with the March lows.

Reviving Manufacturing Sector to Fuel Demand

Supply at Stake

Industry Performance & Rank

Copper miners fall under the Zacks Mining – Non Ferrous industry, which has gained 12.5% so far this year compared with the S&P 500’s growth of 3.8%. The industry falls under the broader Basic Material sector, which increased 2.8%.

The industry currently carries a Zacks Industry Rank #68, which places it at the top 27% of more than 250 Zacks industries. The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bright prospects in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.

Investors interested in the industry can consider Southern Copper Corporation SCCO and Coeur Mining, Inc. CDE. While Southern Copper sports a Zacks Rank #1 (Strong Buy), Coeur Mining carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Southern Copper’s current year’s earnings has gone up 10% over the past 30 days. The company has an estimated long-term earnings growth rate of 14.4%.

The Zacks Consensus Estimate for Coeur Mining’s current year’s earnings suggests year-over-year growth of 140%. The company has a trailing four-quarter earnings surprise of  86.1%, on average.

Investors interested in the industry may keep a tab on stocks like Paramount Gold Nevada Corp. PZG and FreeportMcMoRan Inc. FCX. Both the companies have a Zacks Rank #3 (Hold) at present and a positive earnings growth estimates for 2020.

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Southern Copper Corporation (SCCO) : Free Stock Analysis Report
 
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FreeportMcMoRan Inc. (FCX) : Free Stock Analysis Report
 
Paramount Gold Nevada Corp. (PZG) : Free Stock Analysis Report
 
Coeur Mining, Inc. (CDE) : Free Stock Analysis Report
 
Southern Copper Corporation (SCCO) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
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