Glencore’s share price may depend on copper and zinc prices in the coming months
Glencore share price
the Glencore share price (LON: GLEN) has performed well since the start of the year and going back further, on the back of a global commodity boom. FTSE 100 has seen demand for its products soar as the global economy comes to life. After passing much of the May range, Glencore’s stock price has risen 33% to 327.65p since the start of the year. Going back further, it is up 951.14% over the past 12 months.
Growing demand for metals, especially copper and zinc, has supported Glencore’s earnings over the past 12 months. However, there are reasons for this that may not bode well for the future. For example, the constant concern about inflationary pressures that could push up the price of Glencore’s raw materials. Additionally, as demand increases, Glencore may have its work cut out for it to keep pace.
The immediate future of the Glencore share price depends to some extent on metal prices. In addition, during the first quarter of 2021, Glencore procured 301,200 tonnes of copper and 282,600 tonnes of zinc. The mining giant is most heavily skewed towards these metals, so Glencore’s revenue will likely follow its path. When the Glencore share price fell in early June, Copper prices fell below $ 10,000, while gold also saw sharp declines.
Until March 2021, the world’s zinc production increased by 6.2%, while the use of the metal climbed by 10.3%. For the year as a whole, zinc production is forecast to increase 4.5% to 13.8 million tonnes.
It means, according to Dr Heinz-Jürgen Büchner, Director Industrials & Automotive, IKB Deutsche Industriebank AG, that the price of zinc will reach $ 2,900 per tonne, with a fluctuation range of + $ 500, by the end of the third quarter of 2021. Its current level is just at- above $ 3,000.
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Regarding the red metal, a Chile-based copper agency called Cochilco has raised its price forecast for 2021 because it anticipates a short-term global market deficit.
Cochilco has raised its average copper price forecast to $ 4.30 / lb for this year, a dollar higher than its original forecast made in January.
Its estimate of the average copper price for 2022 was also raised to $ 3.95 / lb, from $ 3 / lb.
Cochilco Executive Vice President, Marco Riveros mentionned: “The macroeconomic scenario [for the rest of 2021] of the main copper consuming economies is positive for the demand for the metal. The depreciation of the US dollar consolidates on the downside after rising US unemployment in March and expansionary fiscal and monetary policies, ”said Riveros.
“On the other hand, the global supply of copper concentrates remains low, which has led to minimal processing and refining costs. As China continues to stimulate demand, the growth of refined copper imports would tend to be moderate in 2021. “
Copper and zinc will both play an important role in the recovery of the global economy after the pandemic and their price targets appear strong for the months to come. This looks good for the Glencore share price going forward. However, risks, such as the inability to meet demand and high inflation, remain.