The Coronavirus has disrupted copper mines and delayed new builds, throttling current and future supply. Meanwhile, demand is bouncing back as the world’s biggest consumers of copper reboot their economies. Stimulus packages being unleashed across the developed also promise to transform the long-term outlook, particularly with spending on copper-intensive green energy infrastructure. 

Related ETFs: iPath Series B Bloomberg Copper Subindex Total Return ETN (JJC), Global X Copper Miners ETF (COPX)

Copper has been on a roll in recent months. Today, the commodity is trading at a price of $2.87 per pound in the spot market, marking a 36% increase from March 22 when copper’s price plunged to a five year low of $2.10 due to a collapse in demand. In the securities market, the copper ETF (JJC) has gained 39% since stocks bottomed on March 23, while the copper miners ETF (COPX) has actually doubled.

Following these impressive gains, we are right back to where we were at the start of the year. Copper’s spot price is just 2% higher than on January 1, 2020, while JJC is up 3% and COPX is down 3%. In comparison, the S&P 500 is flat year-to-date. When looking at performance over a two-year horizon, the copper ETFs still lag the broad market. Over the past two years, JJC returned has +4%, COPX has returned -15%, while SPY returned +15%.

The big question now is whether further outperformance is possible after copper’s recent gains. The answer is yes, based on three factors.

I. Post-Pandemic Recovery of the Global Economy

Industrial production is on the rise globally, as businesses resume their operations. Yesterday’s data release from the Fed showed that U.S. industrial output surged 5.4% in June, the most since December 1959, and beating market expectations. Factory production jumped 7.2%, and even more so in the beleaguered auto industry, where production of cars and auto parts surged 105%. Though U.S. capacity utilization increased 3.5 percentage points to 68.6% in June, that rate is below its long-run (1972–2019) average of…

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