Glencore PLC (LON:GLEN), Antofagasta PLC (LON:ANTO) and KAZ Minerals PLC (LON:KAZ) have all been all upgraded to ‘buy’ from ‘hold’ by analysts at Liberum Capital in a sector review due to their exposure to copper which could get a boost from a thawing in the US/China trade war.
The changes came as analysts at the broker raised their copper price forecast to US$3 per pound (lb) from US$2.70/lb for 2020, while the City consensus is US$2.78/lb.
In a note to clients, the Liberum analysts noted that copper imports into China have picked up again after a lacklustre 2019, reflecting copper concentrate growth as there a bans on scrap imports currently.
They expect a restocking cycle after the growth of consumption in copper products outpaced production for much of 2019, implying destocking.
Prices may be driven higher by a lower seasonal rebuild than expected, as currently there are no concerns about availability, the analysts added.
“Negotiations between the US and China could of course breakdown again and take the copper price down again, but with the US now in an election year, Republicans are unlikely to risk economic growth,” the Liberum analysts concluded..
In late morning trading, shares in FTSE 250-listed KAZ Minerals rose 3% to 580.51p, while FTSE 100-listed Antofagasta added 2% to 987p, and blue-chip peer Glencore inched up 1% to 243.85p.