McMurtry Investment Report & Model Portfolios

Why are copper prices still rising?

April 15, 2024

Why are copper prices rising in a period of continuing strength in the US dollar globally and higher for longer interest rates?

Most of you are familiar with the Wall Street algorithm that pushes commodity prices down when interest rates and the US dollar remain at elevated ;levels.

Copper prices are rising because there is a global shortage of copper production as a result of the closure of First Quantum’s Panama’s mine and logistic issues with some of Anglo American’s production.

Long term the outlook for copper is very positive with EV cars and solar panels using considerably more copper than in the past.

Canadian copper producers stand to benefit more than US ones due to the following factors:

The loonie is currently at multi-year lows vs the greenback

A weak domestic currency directly benefits our domestic producers with copper prices trading in US dollars. This results in much higher Canadian dollars for their copper revenues.

Our domestic equity market is much more exposed to cyclical/ commodity sectors like Materials and Energy.

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