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Data-Driven Commodity Research

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<ul><li>Did China Just Trigger Commodity Markets?</li><li>China’s central bank last week announced a new stimulus package to the economy to curb the growth decline that is still going on.</li><li>Chinese stocks jumped and also “Chinese-linked commodity prices” like soy, copper and steel gained momentum as Governor Pan Gongsheng announced plans to lower borrowing costs and inject more funds into the economy, as well as to ease households' mortgage repayment burden.</li></ul>

Did China Just Trigger Commodity Markets?China’s central bank last week announced a new stimulus package to the economy to curb the growth decline that is still going on.Chinese stocks jumped and also “Chinese-linked commodity prices” like soy, copper and steel gained momentum as Governor Pan Gongsheng announced plans to lower borrowing costs and inject more funds into the economy, as well as to ease households' mortgage repayment burden.

Did China Just Trigger Commodity Markets?

Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

Equity, Bottom-up Analyst

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity Bottom-up Research

<ul>
<li>With increasing market volatility, base metals continue their rocky weekly performance. Copper was up marginally maintaining a level over 9000 USD/ton.</li>
<li>Copper inventories declined at the exchanges, with ~428k tons combined at Comex, LME, and Shanghai, down almost 9% in the last two weeks.</li>
<li>Read our recent initiation on <a href="https://www.smartkarma.com/entities/antofagasta-plc" target="_blank" data-smartkarma-citation="entities:21814:1" rel="noopener">Antofagasta PLC (ANTO LN)</a>, contrasting it with <a href="https://www.smartkarma.com/entities/southern-copper-corp" target="_blank" data-smartkarma-citation="entities:16279:1" rel="noopener">Southern Copper (SCCO US)</a> titled <a href="https://www.smartkarma.com/insights/antofagasta-anto-ln-an-initiation-on-a-mid-sized-copper-miner" target="_blank" data-smartkarma-citation="insights:158671" rel="noopener">Antofagasta (ANTO LN): An Initiation on a Mid-Sized Copper Miner</a>. </li>
</ul>


With increasing market volatility, base metals continue their rocky weekly performance. Copper was up marginally maintaining a level over 9000 USD/ton.
Copper inventories declined at the exchanges, with ~428k tons combined at Comex, LME, and Shanghai, down almost 9% in the last two weeks.
Read our recent initiation on Antofagasta PLC (ANTO LN), contrasting it with Southern Copper (SCCO US) titled Antofagasta (ANTO LN): An Initiation on a Mid-Sized Copper Miner. 


Copper Tracker Sep 23rd, 2024: Markets Volatile, Accumulate Good Copper Names On Weakness

<ul>
<li>Post our  initiations <a href="https://www.smartkarma.com/insights/southern-copper-in-a-league-of-its-own" target="_blank" data-smartkarma-citation="insights:139839" rel="noopener">Southern Copper: In a League of Its Own</a> and <a href="https://www.smartkarma.com/insights/teck-resources-teck-us-the-new-purish-copper-play-in-town" target="_blank" data-smartkarma-citation="insights:152051" rel="noopener">Teck Resources (TECK US): The New Purish Copper Play In Town</a>, we initiate on <a href="https://www.smartkarma.com/entities/antofagasta-plc" target="_blank" data-smartkarma-citation="entities:21814:1" rel="noopener">Antofagasta PLC (ANTO LN)</a> </li>
<li>The company provides an excellent channel check for Chile's mining environment. It accounts for 24% of global mined production in the copper market. </li>
<li>We provide a comparison between all the mining players' ROIC and which are the favorable names to play in the space. </li>
</ul>


Post our  initiations Southern Copper: In a League of Its Own and Teck Resources (TECK US): The New Purish Copper Play In Town, we initiate on Antofagasta PLC (ANTO LN) 
The company provides an excellent channel check for Chile's mining environment. It accounts for 24% of global mined production in the copper market. 
We provide a comparison between all the mining players' ROIC and which are the favorable names to play in the space. 


Antofagasta (ANTO LN): An Initiation on a Mid-Sized Copper Miner

<ul>
<li>After selling its coking coal business to <a href="https://www.smartkarma.com/entities/glencore-plc" target="_blank" data-smartkarma-citation="entities:764:1" rel="noopener">Glencore Plc (GLEN LN)</a>, <a href="https://www.smartkarma.com/entities/teck-resources-ltd-36dbdad5-1430-4d7a-8578-31bc50086f72" target="_blank" data-smartkarma-citation="entities:33343:1" rel="noopener">Teck Resources (TECK US)</a> has pivoted to copper as its primary growth driver. </li>
<li>The 7.3 bn CAD cash (20% of Mkt cap) received from the sale of the coal business stake is being used for buybacks, debt repayment, and growth opportunities.  </li>
<li>The stock is cheap on an EV-EBITDA basis at 7.5x, but we are not too fond of the business's low ROCE. </li>
</ul>


After selling its coking coal business to Glencore Plc (GLEN LN), Teck Resources (TECK US) has pivoted to copper as its primary growth driver. 
The 7.3 bn CAD cash (20% of Mkt cap) received from the sale of the coal business stake is being used for buybacks, debt repayment, and growth opportunities.  
The stock is cheap on an EV-EBITDA basis at 7.5x, but we are not too fond of the business's low ROCE. 


Teck Resources (TECK US): The New Purish Copper Play In Town

<ul>
<li>Concerns about a further slowdown in the Chinese and US economies have led to the commodity complex selling off, but copper remains resilient at the 9000 USD/ton level.</li>
<li>Copper inventories on the exchanges have declined by over 6% in the last three weeks, although they remain elevated at over 470k tons. </li>
<li>We see pockets of value emerging in equities post the sell-off but would only trigger stocks like <a href="https://www.smartkarma.com/entities/southern-copper-corp" target="_blank" rel="noopener">Southern Copper (SCCO US)</a> and <a href="https://www.smartkarma.com/entities/ivanhoe-mines-ltd" target="_blank" data-smartkarma-citation="entities:25338:1" rel="noopener">Ivanhoe Mines (IVN CN)</a> at lower levels. </li>
</ul>


Concerns about a further slowdown in the Chinese and US economies have led to the commodity complex selling off, but copper remains resilient at the 9000 USD/ton level.
Copper inventories on the exchanges have declined by over 6% in the last three weeks, although they remain elevated at over 470k tons. 
We see pockets of value emerging in equities post the sell-off but would only trigger stocks like Southern Copper (SCCO US) and Ivanhoe Mines (IVN CN) at lower levels. 


Copper: Holding Its Ground, Value Emerging In Equities

United States

Copper is a chemical element with symbol Cu (from Latin: cuprum) and atomic number 29. It is a soft, malleable and ductile metal with very high thermal and electrical conductivity. A freshly exposed surface of pure copper has a reddish-orange color. It is used as a conductor of heat and electricity, as a building material and as a constituent of various metal alloys, such as Sterling silver used in jewelry, cupronickel used to make marine hardware and coins and constantan used in strain gauges and thermocouples for temperature measurement.

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Copper (COPPER COMDTY)

Did China Just Trigger Commodity Markets?

Did China Just Trigger Commodity Markets? China’s central bank last week announced a new stimulus package to the economy to curb the growth decline...

The Commodity Report

Copper Tracker Sep 23rd, 2024: Markets Volatile, Accumulate Good Copper Names On Weakness

Copper has managed to sustain a level of over 9000 USD/ton. We analyze our top picks in the copper equity space as well as fundamental drivers of...

Sameer Taneja

Antofagasta (ANTO LN): An Initiation on a Mid-Sized Copper Miner

We compare and contrast ANTO LN (Antofagasta), a mid-size copper producer, with competitors using an ROCE analysis and the impacts of this metric...

Sameer Taneja

Teck Resources (TECK US): The New Purish Copper Play In Town

Building on our coverage in copper equities, we initiate on Teck Resources (TECK US). We explore its future growth prospects after selling its coal...

Sameer Taneja

Copper: Holding Its Ground, Value Emerging In Equities

Copper equities are in the midst of a sell-off, given recessionary fears and weak China data, but copper is resilient. We highlight the stocks we...

Sameer Taneja

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