Picture supply: Getty Photographs
The Glencore (LSE: GLEN) share worth has had a torrid time as of late. To date this 12 months it’s misplaced 1 / 4 of its worth and is down 40% in a 12 months. Tariffs could be hitting world inventory markets, however I feel most traders are lacking a trick right here as tariffs are more likely to be very useful to this commodities dealer.
Copper costs surging
Final Monday (31 March) copper costs within the US surged to an all-time excessive. In 2025, the worth of the pink steel within the US is up 25%. Nonetheless, on the London Metals Change (LME) costs are up lower than half that quantity.
Costs within the US and on the LME virtually all the time transfer in lockstep. The explanation for the distinction is that US producers and suppliers are pre-empting import taxes from the US administration and are shifting to shore up their provides.
What is occurring right here has all of the hallmarks of what has been unfolding with gold not too long ago. Patrons determined for the bodily stuff have been raiding London and New York vaults.
Arbitrage alternatives
This type of dislocation in markets is what Glencore thrives on. It has an unparalleled advertising division that is ready to revenue from volatility in commodity costs.
The worth discrepancy for copper in several geographic areas is creating important arbitrage alternatives for the enterprise, upon which it is ready to generate a payment.
In reality, I imagine that tariffs, the specter of future tariffs, and the opportunity of all-out world commerce struggle is probably not good for long-term world development, however within the brief time period they’re more likely to transform very worthwhile for its advertising division. And it simply doesn’t commerce copper, however a basket of commodities.
Copper deficit coming
I stay firmly satisfied {that a} copper deficit is coming sooner or later and might solely result in one factor: considerably increased costs.
Copper is used within the producer of nearly any product one can consider, together with cellphones, conventional cars, and development. However demand can also be coming from new aspects of the financial system reminiscent of renewables, EVs, electrical energy grid infrastructure enlargement, information centres, and AI.
Glencore estimates that offer wants to extend by about 1m metric tonnes a 12 months out to 2050 to fulfill the surge in anticipated demand. Given the quantity of recognized copper reserves from present mines, a requirement shortfall is a given.
Dangers
The enterprise made a lack of £1.6bn in 2024. An enormous chunk of this was right down to report low remedy and refining costs for copper and zinc concentrates, hitting its smelting operations.
This stays an ongoing situation. The miner is now within the means of shutting a good portion of its smelting operations throughout the globe, as a way to stem the losses.
Nonetheless, I nonetheless imagine that Glencore represents the most effective alternatives within the FTSE 100. The interior mechanics of its advertising division could also be a intently guarded secret, but it surely has a historical past of turning into a money cow in intervals of heightened commodity volatility. One solely has to have a look at 2022 for proof of that. Its share worth may fall additional, however I intend so as to add to my place as quickly as my funds permit.
