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Share Watch – 18 April 2021

Sandfire Resources (SFR:ASX)

Readers may remember the Everlution Share Watch issue last week highlighting the Azure Minerals (ASX:AZS) huge copper find.

Well, over the last week copper stocks weren’t in need of a confidence boost with the red metal continuing to trade at more than $US4.10-/lb. Then along comes another boost when Goldman Sachs made the call that copper was necessarily on the path to an eye-watering $US6.80/lb in 2025.

It was based on a familiar thematic – copper is essential to global decarbonisation and that after a couple of years of supply surplus caused by new production from mines being built now, a chronic supply deficit emerges (demand and supply issues of copper were covered in the Everlution issues of 11 & 18 December).

A familiar thematic all right, but Goldman Sachs is one of the first big names to put a price response estimate to it all, certainly one as big as its $US6.80/lb come 2025 at any rate.

To get to that level, there will be some step-changes on the way, both downwards and upwards. And a prediction for 2025 is too far off to affect the pricing of most of copper stocks in the here and now in a meaningful way.

Most but not all. That came through in follow up work by Goldman Sach’s equities desk to the upgrading of the firm’s copper price deck.

The clear ASX winner in the here and now was Sandfire. It is why the stock popped 6% higher to $5.81 on Thursday in response to Goldman Sachs’ “Copper is the new oil” opus.

The firm cranked up its 12-month target price for Sandfire by 31% from $5.80 to $7.60 and upgraded its rating from a “neutral” to a “buy.”

Financial indicators

The VIX fear gauge down since 11 April by 0.44 of a point to 16.25.

The Dow Jones Industrial Average up 398.07 points or 1.18% since 11 April to a record 34,200.67, the STOXX 600 up 5.26 points or 1.20% to 442.49 and the Shanghai Composite index down 24.22 points or 0.70% to 3,426.03.

Gold up to 1,777.30. US 10-year Treasury Bonds down to 1.584 and oil up to 63.07. Cryptos Bitcoin down by 8,742 points or 14.41% to 51,907.

ASX 200 up 68.30 points or 0.97% since 11 April to 7,063.50 today. The Aussie dollar up to 77.39US cents.

Eco Market Spot Prices

LGC $35.15

STC $39.05

ESC $30.70

VEEC $60.00

ACCU $18.50

Sources: RenewEconomy, demandmanager,  Reuters, SMH, Market Watch, Stockhead

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