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Unless you’ve been living under a rock through 2024, you’re probably aware that copper is booming.
Prices for the metal were up 32.3% YoY on Wednesday 29 May, per TradingEconomics, as fears of a global shortage compound bullish sentiment.
The rally kicked off earlier this year when reports hit the market stating Chinese smelters were reducing output based on lower margins.
We’ve seen Macquarie Bank issue a price forecast for copper as recently as May 24 predicting the price will rise another 14% through the rest of 2024.
Morgan Stanley has also offered its view in May that the global copper market, broadly speaking, faces a “perfect storm” for further upside.
Macquarie, however, also sees the copper market swinging back to surplus in 2026 – but analysts at big Mac only see CY26 prices dropping marginally as a result. To make matters more complicated, Macquarie then expects to see the price rise again in 2028.
Its forecast for 2028 prices sits at US$11.5K/t of copper – well above its recent record high above US$10K/t.
Copper traders typically see that latter level as a signal that it’s time for a bullish psychology..
That bullish psychology is very real right now on the ASX. Many copper juniors have shot up in recent weeks, and as for Macquarie analysts, they’re closely watching two smaller companies in particular: 29Metals (ASX:29M) and Aeris Resources (ASX:AIS).
It’s also watching the higher-priced Sandfire Resources (ASX:SFR), trading around $9.53/sh mid session on Monday, May 27.
HSBC also on board
At the same time, analysts working for China’s HSBC bank have stated their belief the market is on the cusp of a ‘super bull rally’ for commodities which, of course, includes copper.
While 2024 started off as a uranium story, it’s copper that’s come to be the much-watched darling material..
Like uranium, copper is largely a decarbonisation and ESG-focused investment proposition – the metal is needed for electrification, broadly.
That is as true for copper wiring in the walls of businesses, offices, and homes, as it is for large grid-scale operations requiring transmission lines.
Copper is also needed for wind turbines, solar panel infrastructure, EV batteries (and for larger components of the vehicles broadly), power grids, hydrogen electrolysers, and oil and gas infrastructure.
But not all analysts are entirely harmonised in agreement.
Is Chinese supply really that bad?
ANZ bank analysts said last week they expect a short-term correction to define copper prices – which we could be seeing as of May 27, 2024.
On the most recent Friday session, a broad-based metals rally (also lifting prices for gold, silver and base metals like zinc) took a breather.
But this doesn’t necessarily combat or challenge calls from HSBC or Macquarie – there’s still more than six months of the year to go.
ANZ’s bull case directly referenced copper mine closures around the world, further compounding upward effect driven by China’s reported decision to slash output from smelters.
Whether or not this thesis proves to be as compelling as it’s put forward remains to be seen – especially because contrasting reports suggest copper in China is plentiful and there’s no dearth of supply in the world’s second largest economy.
The Chinese economy is having no shortage of its own problems right now – particularly in the property sector – so whether the story of China’s own domestic supply will be taken as a signal impacting larger global copper markets is in the eye of the beholder.
ASX copper stocks to watch
What all of this means – questions around Chinese volumes notwithstanding – is that we’ve been seeing some pretty impressive performance runs from companies exposed to copper.
Perhaps the biggest mining story of this year, repeated attempts by Australia’s BHP Group Limited (ASX:BHP) to buy out UK-based multinational mining giant Anglo American is itself a copper story.
In short, BHP wants Anglo American’s existing copper mine assets, as opposed to paying the higher costs of starting an entirely new copper mine, given the current lending environment where interest rate cuts have not yet begun (either at home or in the US).
But a lot of smaller – and more affordable companies – are also on the radar. Here are some ASX stocks in the copper space to watch.
All share data information is accurate as at close on Tuesday 28 May 2024.
Metals Acquisition (ASX:MAC)
- Share price: $20.74
- Market cap: 1.44B
- YTD performance: +9.16%
- 1Y performance: 9.16%
Metals Acquisition (ASX:MAC) is a dual-listee on both the ASX and NYSE, and one of the more expensive picks on this list.
Its core asset is the 100% owned CSA copper mine in NSW which it picked up off Glencore around a year ago in June of 2023.
The company most recently teamed up with ASX-listed Polymetals Resources (ASX:POL) to form a “strategic alliance” with a view to synergising the CSA and Endeavour copper miens respectively – both located in NSW’s Cobar Basin, 5km apart.
This stock is a copper producer, pushing out around 40,000t each year, according to the company’s website.
Sandfire Resources (ASX:SFR)
- Share price: $9.49
- Market cap: 4.34B
- YTD performance: +29.3%
- 1Y performance: 68.6%
Sandfire Resources (ASX:SFR) is another copper producer, but more affordable, and with the added backing of a recent Macquarie rating of “Outperform.” However, the stock is already at its price target.
The company’s claim to fame is its discovery of the DeGrussa copper-gold deposit some 900km away from Perth, WA. Using the cash that followed, the stock moved to Spain, picking up an A$2B+ project called MATSA.
The stock is also active in Africa overlying the Kalahari Copper Belt, one of the most well-known copper mining regions in the world.
Sandfire describes itself as a company leaning into the decarbonisation and renewables thematics broadly.
Castillo Copper (ASX:CCZ)
- Share price: 0.9cps
- Market cap: $11.05M
- YTD performance: +41.7%
- 1Y performance: -22.7%
Castillo Copper (ASX:CCZ) is a copper explorer as opposed to a producer and as such its share price premium reflects this.
The company has been a penny stock for much of its recent past, but YTD performance reflects the upside the 2024 copper rally has brought the microcap.
Its main operations are in QLD where it oversees the ‘Big One’ deposit near Mt. Isa. However, the explorer is also active in Zambia, where it has prospective assets overlying Zambia’s copper belt.
Castillo also now boasts the Cangai copper mine back home in Australia, described as one of the country’s “highest grading historic copper mines” with a JORC resource of 3.2Mt of ore at 3.3% copper.
American West Metals (ASX:AW1)
- Share price: 14cps
- Market cap: $72.4M
- YTD performance: -3.45%
- 1Y performance: 129.5%
American West Metals (ASX:AW1) is listed on both the ASX and the US OTCQB markets, a bourse closer to its operations in North America, both in the US and Canada.
The company’s major copper project is the Storm project in Canada, though, it also has the ‘Copper Warrior’ play in the midwest US. American West describes itself as a copper-zinc explorer.
American West released a maiden JORC estimate for its Storm project in early 2023, posting 17.5Mt of ore at 1.2% copper – lower grades than Castillo – but with silver also featured, albeit, at low grades.
It grew its stake in Storm to 80% back in September of 2023.
Alara Resources (ASX:AUQ)
- Share price: 7cps
- Market cap: $49.5M
- YTD performance: +64.3%
- 1Y performance: +137.9%
Alara Resources (ASX:AUQ) is an ASX-listed and Oman-based copper explorer that recently became a producer and exporter of copper concentrate.
The company shipped off its first maiden export of copper concentrate in late May of 2024, with over 1,000wmt of product being shipped to China under a 2023 deal with Trafigura.
The company also has its eyes on gold, snagging copper-gold acreage around Oman. Alara had long been targeting a mid-2024 date for first production – and by luck, now it could ride the winds of a copper rally.
In the background, the Omani government has recently been moving, in tandem with other gulf and MENA states, to incentivize hard rock mineral exploration within its borders to wean off an economic reliance on hydrocarbon industries.
Culpeo Minerals (ASX:CPO)
- Share price: 4cps
- Market cap: $6.3M
- YTD performance: +8.6%
- 1Y performance: -37.7%
Culpeo Minerals (ASX:CPO) is a nanocap copper explorer located in South America (and also shares an affinity for copper-gold mineralisation combined.)
Solely focused on Chile, the company has long been probing its acreage in that nation state for the copper hits it needs to bring development across the line to positive FID.
Its Chilean flagship is the Lana Corina project for which the company most recently flagged rock-chip samples at the Vista Montana prospect grading up to 2.62% copper.
At the time of writing, drilling remains underway on-site Lana Corina, targeting a 3km long corridor of target geology.
Hot Chili Limited (ASX:HCH)
- Share price: $1.07
- Market cap: $153.7M
- YTD performance: -1.4%
- 1Y performance: -5.75%
Hot Chili Limited (ASX:HCH) is the last company on this list, and another copper player based in Chile. This company, however, is a relatively recent producer.
The company has three main projects – its Costa Fuego project, where the company has focused many activities across the last year, was recently expanded at the end of April 2024.
The company also acquired the Cortadera project in February of 2019, where it has a JORC estimate of 724Mt of ore for 2.9Mt of copper, as well as 2.7Moz of gold and 9.9Moz of silver.
The company, well along in its development journey, boasts the largest copper resource on the ASX.
