Copper and Aluminum Prices Expected to Rise Amid Growing Demand and Supply Constraints

Jefferies has forecasted a likely increase in copper and aluminum prices over the medium term, driven by rising demand from electrification, a growing global economy, and supply constraints. The U.S. bank recommends buying shares of preferred copper and aluminum producers, including Freeport-McMoran, Teck Resources, Lundin Mining, Alcoa, and Glencore. According to Jefferies, potential Fed rate cuts could significantly offset cyclical near-term risks, benefiting these stocks. Currently, shares in Glencore are down 0.6% at 480.15 pence.

Jefferies analysts are cautiously optimistic about the outlook for mined commodity prices in the second half of the year. They plan to closely monitor global manufacturing PMIs, China credit growth, and property market data to gauge demand recovery from the second quarter's soft patch. Key indicators to watch include India PMIs and U.S. ISM data, alongside critical factors such as interest rates, inflation, Fed policies, and the outcome of the U.S. elections.

Their optimism is based on expectations of marginal improvements in China's industrial activity, strong economic growth in India and Southeast Asia, and the initiation of infrastructure projects in the U.S. Glencore and Alcoa remain their top mining stock picks for the second half of the year.