M&A opportunities limited: However, we also showed that the opportunities for M&A were limited because: many copper companies that are potential takeover targets have difficult shareholding structures; the number of quality asset disposals from existing copper producers is likely to be a lot lower than in the past; and there are a limited number of late-stage development copper projects with resources of greater than 3.0Mt contained copper that are likely candidates to be acquired.
Copper’s tight supply situation was masked by the trade tensions, according to Darwei Kung, head of commodities at DWS Investment Management Americas Inc., who is bullish on the metal. Now with a preliminary truce between the countries, copper is looking “positive” this year, he said.
"From a more macro point of view, there remains a deep disconnect, relatively speaking, between low prices and low inventories of metal held in warehouses. One does not need to spend a great deal of time doing an in-depth analysis of the markets to see the incongruity, just glance at where inventories were for each [base] metal a few years ago, and where they stand now and you will see our concern," said copper consultant John Gross in the Copper Journal Monthly Report published in early January.
Brian Leni joins me today to discuss where he stands on investing in the base metals. We focus on copper but also mention a number of other base metals from an investment angle. There is a supply and demand side as well as outside factors that have been driving price over the past few years.