Since last year, industrial metals have been experiencing a hot bull run, which has boosted prices to record highs. Investor numbers have been increasing, with Wall Street leaders such as Bank of America Corp. and Goldman Sachs Group Inc. advising investors to continue buying in anticipation of a rally driven by spending on electric car infrastructure, renewable energy and global recovery from the pandemic.
Metals such as copper have doubled in price in the last year to more than $10,000 per ton, with Bank of America claiming that this number may double if supply fails to meet the increase in demand. Investors in futures markets are following suit, with speculative bets in New York and London copper contracts hitting record highs during the metal’s rise. Bulls note that the red metal’s long-term prospects could bring in even more investors.
BlackRock Inc.’s global head of thematic investing Evy Hambro stated that rather than physical demand, it was financial demand that drove products to their peak, adding that this trend would probably last a few decades given that the world was becoming commodity intensive. This can be seen in the high amounts being injected into various metal-focused, exchange-traded products.
Mining companies are growing also as they rake in supercharged profits. BHP Group and Rio Tinto Group’s valuations are at record levels, for example, with investments into mining companies also increasing significantly. For instance, the BlackRock World Mining Fund’s assets rose to more than $7 billion since the last quarter of 2020 to April 2021.
Additionally, mining companies such as Anglo American Plc and BHP Group as well as various high-profile investors are moving away from assets such as oil and coal and extractive industries and toward metals, such as copper, which are crucial for renewables. This comes at a time when more countries are focused on decreasing carbon dioxide emissions and eliminating the use of fossil fuels, in order to promote the adoption and use of renewable energy and electric vehicles.
Citigroup Inc.’s managing director for commodities research Max Layton explained that commodity-trading advisers were among the first investors to react last year when the red metal began to rebound, noting that the biggest inflows from traditional hedge-fund investors into the market came after coronavirus vaccines had been developed. Citigroup also noted that collectively commodity-trading advisers will have boosted speculative positioning in Comex and London Metal Exchange copper contracts to a new high by the year’s end, with their net position making up more than 10% of underlying demand.
As the industrial metals continue their bullish price movement, companies such as First Energy Metals Ltd. (CSE: FE) (OTCQB: FEMFF) will likely see increased demand for their stocks as investors seek to reap from this trend.
NOTE TO INVESTORS: The latest news and updates relating to First Energy Metals Ltd. (CSE: FE) (OTCQB: FEMFF) are available in the company’s newsroom at https://ibn.fm/FEMFF
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