RE: Sliced a tranche21 Mar 2023 00:10
The most important reason to buy Glencore stock is that the company is involved in key commodities that are needed now and in the future. It is one of the leading miners and sellers of coal, a commodity that will become more essential than most analysts expect.
While most countries are moving from coal, the reality is that the transition is proving difficult. The UK recently fired up its coal plants in a bid to diversify its energy sources. Other countries like China and India are still consuming record amount of coal.
Copper as a catalyst
While Glencore is involved in ‘dirty’ coal, it is also a major player in commodities that are essential for the energy transition. For example, it is a key miner of copper, a metal whose usage is expected to jump sharply in the coming years. Copper production will need to more than triple by 2040, which will push its price to over $10,000 a tone. Glencore expects to produce over 2 million tons in the next few years.
Further, Glencore also has a strong market share in metals that are used in electric cars like lithium and nickel. The company sold 263 kt of nickel through its marketing business. It produced 107 kt of nickel in its plants.
Therefore, Glencore is benefiting from the rising demand of both dirty commodities like coal and ‘clean’ ones like lithium, cobalt, and nickel.
However, the Glencore share price could still see some weakness in the coming months. As shown in the daily chart below, the stock is about to form a death cross, which happens when the 200-day and 50-day exponential moving averages (EMA) make a crossover. Therefore, it could slip to about 350p in the near term. In the long term, the shares will bounce back as the company’s revenue booms
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