Copper Miners ETFs Is Awakening and its Rally Could be Sizable

Copper prices, often viewed as an important gauge of economic health and activity are rebounding and there are signs the Global X Copper Miners ETF (NYSEARCA: COPX) will go along for the ride.

COPX, which turned 10 years old last month, tracks the Solactive Global Copper Miners Total Return Index. The Global X fund jumped almost 7% on Monday and is higher by nearly 11% over the past month.

Copper has taken a beating on fears of a slowdown in China, the largest buyer of the industrial metal. Earlier this year, the red metal endured a 13-session losing streak, but the tide is turning in favor of the metal and new demand for products aimed at coronavirus protection is helping the commodity.

“Historically, copper has been used in hospital doorknobs and IV stands to curb the spread of illness. It has also been used in fabric,” reports Fast Company.

Benefiting From Mask Demand, Other Factors

The COVID-19 pandemic is forcing us to wear masks when we’re out and about and there’s a benefit to COPX on that front because some suppliers are tapping into copper’s healthcare history and making masks with the metal.

“Now, as coronavirus has swept across the planet and forced more people to wear masks, more companies are thinking about incorporating copper into masks,” according to Fast Company.

New sources for copper are important at a time when there’s expected to be a supply glut of the red metal even though production was hampered by the coronavirus earlier this year.

“The fallout of the coronavirus outbreak has forced global miners to cut their 2020 capital expenditure by about 19% and copper production outlook by 8%,” according to data compiled by Reuters. “Demand for metals has been hit as the coronavirus spread from China to other parts of the world and forced several nations to shut down much of their economies to contain the outbreak.”

The good news is some COPX now have firmer balance sheets as a result of the reduced spending and some of the fund’s holdings are viewed as credible takeover targets as large-cap gold miners now flush with cash look to boost other areas of their operations.

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.