Copper Equities Surge on Bullish Factors, Canada Remains Bullish on Equities

Strategic Insights -

RBC Capital Markets' Sam Crittenden attributed the 8.2 per cent gain in copper equities to a confluence of bullish factors, including a weakening U.S. dollar, supply disruptions at Codelco's El Teniente mine, and Chinese data surprising to the upside. Chinese copper imports rose 3.4 per cent in July, and concentrate imports jumped 9 per cent, amid record smelting activity. Additionally, LME and Shanghai inventories rose 10 per cent and 13 per cent, respectively, while CME inventories grew only 2 per cent, now accounting for 50% of combined exchange inventories.

BMO chief strategist Brian Belski remains optimistic on Canadian equities, citing a normalization process in the earnings recovery, with S&P/TSX FY1 and FY2 bottom-up EPS estimates up almost 2 per cent since bottoming at the end of June. Profits have stabilized over the last few quarters, and growth expectations have accelerated back toward high-single digits, potentially reaching double digits by the end of the year.

In a contrasting view, BofA Securities' Clifton White cautioned on the natural gas bull case, given persistently loose balances, with storage surplus swelled to 195 Bcf. Western regions' stocks are rapidly re-filling, potentially pushing gas back to the Midwest and Eastern US this fall. Higher production drove their outlook for inventories to end summer around 3.93 Tcf, reducing their September-December 2025 price forecast to $3.0/mmbtu.

Key Takeaways:

  • Copper equities gained 8.2 per cent last week, driven by a weakening U.S. dollar, supply disruptions at Codelco's El Teniente mine, and Chinese data surprising to the upside.
  • Chinese copper imports rose 3.4 per cent in July, and concentrate imports jumped 9 per cent, amid record smelting activity.
  • LME and Shanghai inventories rose 10 per cent and 13 per cent, respectively, while CME inventories grew only 2 per cent, now accounting for 50% of combined exchange inventories.
  • BMO's Brian Belski remains optimistic on Canadian equities, citing a normalization process in the earnings recovery, with S&P/TSX FY1 and FY2 bottom-up EPS estimates up almost 2 per cent since bottoming at the end of June.
  • Profits have stabilized over the last few quarters, and growth expectations have accelerated back toward high-single digits, potentially reaching double digits by the end of the year.
  • BofA's Clifton White cautions on the natural gas bull case, given persistently loose balances, with storage surplus swelled to 195 Bcf.
  • Higher production drove their outlook for inventories to end summer around 3.93 Tcf, reducing their September-December 2025 price forecast to $3.0/mmbtu.
  • Golden Pass enters service later this year, and newly added rigs should provide incremental production, driving their outlook for inventories.

Statistics:

  • Copper equities gained 8.2 per cent last week.
  • Chinese copper imports rose 3.4 per cent in July.
  • Concentrate imports jumped 9 per cent in July.
  • LME and Shanghai inventories rose 10 per cent and 13 per cent, respectively.
  • CME inventories grew 2 per cent.
  • Current combined exchange inventories account for 50% of storage surplus.
  • Storage surplus is 195 Bcf.
  • Inventories are expected to end summer around 3.93 Tcf.
  • S&P/TSX FY1 and FY2 bottom-up EPS estimates up almost 2 per cent since bottoming at the end of June.
  • Profits stabilized over the last few quarters.
  • Growth expectations accelerated back toward high-single digits, potentially reaching double digits by the end of the year.
  • BofA's September-December 2025 price forecast reduced to $3.0/mmbtu.

Sources:

  • RBC Capital Markets analyst Sam Crittenden
  • BMO chief strategist Brian Belski
  • BofA Securities energy analyst Clifton White
  • The Globe and Mail