Far East Capital Newsletter
BHP bid for Anglo American highlights copper expectations
28 Apr 2024

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BHP bid for Anglo American highlights copper expectations

The gold price corrected to lower levels during the week and one commentator said it was the worst sell-off in two years, but to my mind that is the wrong inflection to be taking. Gold has had a great run so we should expect some profit taking to kick in. The faster and higher any commodity goes, the more scarier it gets. I would much prefer sensible and more sustainable trends as opposed to dramatic moves on any day or two, but maybe that is just being a conservative. Volatility does provide trading opportunities.

The US$40bn bid by BHP for Anglo American announced late in the week is going to dominate the media for weeks, if not months - even tough Anglo has already rejected the bid as being too low.

The press loves to play up to large deals and stimulate discussion about all the implications. The first point made is that BHP is chasing copper assets. That plays along with the thematic that the world needs much more copper for the the decarbonisation path. While that seems obvious, we have not yet seen much impact on the copper price. Copper company share price performance has been lacking. That may be about to change if the enthusiasm trickles down to the smaller end. We do not intend to say anything more on the bid, except see what I said about takeovers a recently, and note the share price fall of BHP when the bid was announced. There will be plenty of other commentaries floating around so we don't need to add to the noise 

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