Copper prices are up 9% for the year, but have been trending lower since the middle of May. However, supply disruptions from key producers in Latin America could help reverse that trend.
"Disruptions have become a fixture within the mining sector in recent years," Oil Price confirmed. "Beyond Chile, copper mines in Peru, including the world’s second-largest copper mine, Las Bambas, faced repeated blockades as communities pressured mining companies for greater support. Meanwhile, First Quantnum’s Cobre Panama copper mine remains idled following community backlash."
Supply disruptions may not be ideal for consumers in need of the industrial metal, but it does open the pathway for investment opportunities. As Oil Price noted, "as a long-term copper supply deficit looms, such outages have greater potential to spook market participants waiting for supply tightness to materialize."
With an eye on the long-term horizon, this could bode well for buy-and-hold investors. Combine that with an increase in demand for industrial usage like EV manufacturing and it could propel prices even further.
China, in particular, could be a key mover for prices. The second largest economy has been struggling with a real estate development crisis from a few years ago. But as it regains its economic footing, demand for the metal could rise.
Copper Mining Opportunities
One way to take advantage of potential price spikes in the element is via mining companies. On that note, Sprott has two ETFs that offer easy ingress into this mining sector.
For a broad option, consider using the Sprott Copper Miners ETF (COPP). The fund seeks to provide investment results that correspond generally to the total return performance of the Nasdaq Sprott Copper Miners Index (NSCOPP). What the index does is essentially track the performance of a selection of global securities in the industry. This includes producers, developers, and explorers that support the industry. Overall, COPP provides blanket exposure to this mining industry, focusing on large-, mid-, and small-cap mining companies.
Small-cap companies can also offer potential growth when the industrial metal skews toward the upside. With that, consider the Sprott Junior Copper Miners ETF (COPJ). The fund is ideal for investors who want to focus on even more aggressive growth prospects with small-cap exposure. COPJ aims to provide investment results that track the total return performance of the Nasdaq Sprott Junior Copper Miners Index. The index incorporates mid-, small-, and micro-cap companies entrenched in copper-mining-related businesses.
For more news, information, and analysis, visit the Gold/Silver/Critical Materials Channel.
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