Despite the U.S. dollar weakening and the Canadian dollar rising, commodity stocks are still lagging. Probably, this has to do with the seasonality of late-July; particularly on an exchange that goes to sleep most summers. Also, with US equities hitting new highs daily, few contrarians are betting on junior mining stocks. Copper explorers continue to catch a serious bid as the price of the world’s best known base metal moves higher.
Copper is outperforming many metals at the moment and hit a 2-year high today. The run up comes amidst reports from China that it will discontinue imports of scrap copper by the end of 2018. Consequently, this would boost demand for refined metals imported to China. According to MarketRealist.com, “China is the world’s largest copper consumer—it accounts for almost 45% of the global demand.”
News of a potential ban on scrap copper is adding fuel to an already overheated copper market.
Copper Explorers and Miners Benefit from Trump
Numerous junior copper miners initially benefited from Trump’s election victory on the promise of historic infrastructure spending. While, the majority of these companies fell off, many are now surging as copper regains its shine. The first rise is post election and the second represents the run copper has been on since June.
Hudbay Minerals – 1 Year Chart
Taseko Mines – 1 Year Chart
Canada’s juniors will have some competition as majors move to secure supply.
Bloomberg reported this morning that,
“The value of Ecuador’s mining sector could rise to $7.9 billion by 2021 from $1.1 billion this year as major players arrive, according to Fitch Group’s BMI Research.”
Ecuador Remains Hot Spot for Copper Exploration
Canadians have been exploring in Ecuador for decades; however, new competition from Australia is making Canada up its hustle.
“BHP joins Australian competitors including billionaire Gina Rinehart’s Hancock Prospecting Pty, Fortescue Metals Group Ltd. and Newcrest Mining Ltd. in establishing offices or adding exploration licenses in the nation, according to Rodrigo Izurieta, president of Ecuador’s Mining Chamber.”
The hunt for copper and gold is on. With China buying nearly half of all global copper, banning scrap copper is significant. Copper explorers and miners alike are scouring the globe for new potential assets. With drills turning all over Canada and South America, expect results to drive select juniors to new highs this fall. Summer is when smaller companies jockey for position.