Three Reasons Why Copper Stocks have Soared 73% in 2021

  • Stock Market News
Three Reasons Why Copper Stocks have Soared 73% in 2021
Credit: © Reuters.

By Aditya Raghunath -- Copper prices have risen to over $9,000 a metric ton for the first time in nine years. The world is facing a shortage of copper and the price for the metal is shooting through the roof around the world. The situation is no different in India. Stocks like Hindustan Copper Ltd (NS: HCPR ), Hindalco Industries Ltd. (NS: HALC ), and Vedanta Ltd (NS: VDAN ) have seen their prices move in tandem with the global copper rally.

Hindustan Copper Ltd (NS: HCPR ) has risen over 73% since December 31. It is currently trading at Rs 105.9 compared to Rs 61.15 on December 31. Hindalco has risen 35% to Rs 324 today compared to Rs 240.55 on December 31, and Vedanta is at Rs 207 today, up almost 29% from Rs 161.5 on December 31.

The major reasons for this are:

  1. Chinese buying: China is buying up copper-like nobody’s business. There is a huge demand for copper and it has met a huge shortage. Goldman Sachs Group Inc (NYSE: GS ) has warned of a historic shortage with “the market now on the cusp of the tightest phase in what we expect to be the largest deficit in a decade” as Chinese buying “triggers the next leg higher”. Goldman says they expect copper prices will near a record very soon.
  2. Demand for renewable energy: The world is adopting renewable sources of energy at breakneck speed. And guess which metal is very important as a raw material? That’s right, it’s copper. As demand for renewable energy grows, so does the demand for copper.

Trillions of dollars in stimulus: Governments across the world are unleashing stimulus packages like never before. Commodity prices are going up and copper is one of the main beneficiaries in this space.

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