For a good reason, the copper stock has been a hot issue on the stock market. The nation’s adoption of clean energy technologies is causing a sharp increase in demand for the metal that conducts electricity. According to some experts, the demand for the copper stock will be more than treble by 2030.
Goldman Sachs thinks the price of copper will hit a record high of $11,000 per tonne in 2023. Today, we’ll examine why prices are expected to rise and which stocks could do well in the short term.
As you learn more about the copper stock market, keep in mind that investing in speculation is usually a quick way to lose money. Trying to predict when a market trend will happen is hard at best and impossible by all reasonable standards. But that doesn’t mean that copper and other commodities like it aren’t good investments. In fact, having commodities in your portfolio can help you deal with the effects of inflation.
Why do experts think that the price of copper stock will go up?
Trafigura, a company that trades in commodities, says that the first reason is that stores are dangerously low. Early in the fall, Trafigura’s data showed that the world’s copper stores were only enough to cover 4.9 days of production. They predicted that by the end of the year, the stores would only be enough for 2.7 days.
On top of this, there are reasons to think that China may start to increase its industrial production in the next few months. After years of strict COVID-19 policies, recent protests may force the government to rethink its pandemic plans. This could lead to factories working at higher capacities than they have in a long time.
Watch for Copper Stocks in 2023
As laws about the environment get stricter, it becomes opening new mines is getting harder and harder.
The BHP Group Inc. (BHP)
The BHP Group Ltd is based in Australia, but it has mines all over the world. It’s already the largest copper supplier in the world. BHP has put plans in place to help this part of its business grow even more, in addition to the head start it already has.
Near the end of 2022, BHP made $16.9 billion in profits, which was a huge jump from the $6.9 billion it made in 2021. It’s even more than the $9.4 billion the company made in 2020 and the $6 billion it made in 2019 before the pandemic.
With such a large share of the market, BHP is in a good position to benefit from any price increases for copper stock that might happen.
With such a big share of the market, BHP is in a good position to make money if the price of copper goes up.
Southern Copper Corp.,
Based in Mexico, but the smaller company focuses mostly on this metal. Since 2019, when Southern Copper Corp. made $3.79 billion in gross profit, it has been going up. This number had gone up to $7.15 billion by 2021.
This number should go down in 2022, but only because the company has put a lot of money into its mines in Mexico and South America. On the long run, these investments should bring in more money.
If the price of copper does go up, this company is likely to make some money off of it.
The Newmont Company (NEMXEM +1.7%)
The main thing that the American company Newmont Corporation does is work with gold. But the company, which is based in Colorado, also has large copper mining operations.
Over the past few years, net income has been all over the place. It started with a loss of $76 million in 2017, peaked at $2.88 billion in 2019, and then dropped to $1.11 billion in 2021. All of this chaos is balanced out by the company’s gold reserves, which are 96 million ounces. keep business running smoothly.
If the price of copper goes up, Newmont Corporation could get closer to growing its net income and stop going down. Even though the company’s operating costs will be high in 2022, it is not considered to be very risky because it has extra cash on hand in the form of gold.
The Barrick Gold Company (GOLD)
Barrick Gold Corporation’s main business is, not surprisingly, gold, but it also mines copper. This year, the company got a huge break when Zambia, where one of its biggest copper mines is, announced plans to restructure and, in the end, lower copper stock mineral royalty taxes.
In the past few years, the company’s net income has been going down, but the decreases have been pretty small. The net income of Barrick Gold Corporation was $5.27 billion in 2019, and it will go down over the next two years, to $2.54 billion in 2021.
The tax cut would be reason enough to think that Barrick’s copper stock and mining operations will have a better bottom line going forward. If price jumps happen at the same time as this tax break, the financial gains for this part of the business could look even better.
Freeport McMoRan (FCX):
Freeport McMoRan is a mining company that is based in the United States. This fall, they started talking with the Indonesian government about getting another 19 years of copper mining rights in the country. This could mean that they found more copper stock than they thought they would.
Since 2019, when the company had a net loss of $245 million, Freeport McMoRan’s net profits have been going up. In 2020, net profits went up to $596 million, and in 2021, they went up even more, to $4.3 billion.
If Freeport McMoRan did find bigger copper stock deposits than they thought they would, it could put them in a good position for both current shortages and ones that will happen in the future.