Copper prices run as commodity supercycle rumps up

Copper prices are trying to break out of its stubborn trading range, rallying 3.3% overnight to a 3-month high of US$4.56. 

Copper prices push above $4.5 resistance, TradingView

The bullish move comes amid a broad-based rally across the commodity sector, from household metals like iron ore and gold, all the way through to nickel and aluminium.

Looking at copper more specifically, BlackRock’s global head of thematic and industry-based investing, Evy Hambro told Bloomberg that “what we’re likely to see is strong demand that will keep prices at very very good levels for the producers for many years into the future, and that could be decades.”

The Australian Government commodity forecaster, the Office of the Chief Economist (OCE), held a similar view in its December quarterly report, saying  “copper looks likely to enter a strong demand phase over the outlook period, supported by both the post-covid-19 economic recovery and the long term transition to renewable energy technology and battery storage.” 

Refined copper consumption is expected to slightly outpace copper production for the OCE’s outlook period to 2023. 

Source: Office of the Chief Economist, December quarterly (2021), LME (2021) office cash price; World Bureau Metal Statistics (2021); Department of Industry, Science, Energy and Resources (2021)

ASX copper stocks on the rise

Higher spot prices is music to a miners ears.

Oz Minerals (ASX: OZL) is up 1.4% and up 6.2% in the past month. 

Sandfire Resources (ASX: SFR) is lagging behind, down -0.85% but up 9.8% in the past month. 

Copper Mountain Mining (ASX: C6C) is one of few operational small cap copper miners, up 6.7% and rallying 13% in the past month. 

Towards the speculative end of town, notable names include: 

• Eagle Mountain Mining (ASX: EM2) 

• Carnaby Resources (ASX: CNB) 

• Cooper Metals (ASX: CPM) 

• 29Metals (ASX: 29M)

You run, I follow 

Oz Minerals tracked the performance of copper until November last year.

Investors might have pushed up its valuation in wake of recent events surrounding copper demand and supply.

Copper price vs. Oz Minerals returns since 1 Jan 2022, TradingView

What brokers think

Sticking to Oz Minerals, brokers aren't seeing much upside in the copper major.

Seven major Australian stockbrokers cover the company.

The consensus is a Buy rating with a $25.27 price target (-13.4% downside).

The downside might reflect outdated broker price targets from October, when Oz Minerals delivered a relatively soft September quarter update.

The latest broker update from Macquarie (December 2021) rated the stock as outperform with a $33.00 price target (13% upside).

Macquarie viewed Oz Minerals and 29Metals as its preferred copper plays.