Jun. 23 at 5:31 PM
Scotia: We recommend Cu exposure given low inventories & the impact of elevated supply side under-performance (highlighted most recently by Kamoa-Kakula), as we forecast a market in a multi-year modest deficit position under a relatively unassuming demand scenario, before transitioning to a large structural deficit by 2029-2030 driven by a lack of supply growth.
With average 2025E-27E EV/EBITDA spot multiples of 6.5x, 5.6x, & 5.6x for the large/mid-cap base metal producers (or 6.5x, 5.5x, & 5.6x at our price deck) vs 3-yr & 10-yr avg multiples of 6.6x & 5.9x, valuations appear attractive.
Equities are trading at an implied average Cu price of
$4.85/lb or 10% above spot (vs. average premium of 20% since 2023).
Global copper demand increased by a surprisingly strong +3.4% in 2024, up from +2.7% in 2023 & only +1.1% in 2022.
Our updated 2025-2027 global copper demand growth expectations of +1.8%, +2.2%, & +2.3%, compare w/ +1.5%, +2.3%, & +2.4%, previously
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