ASX copper shares are sliding…buy the dip?

ASX copper shares are broadly sliding today. With copper prices approaching record highs, what can investors expect next?

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ASX copper shares are broadly sliding today.

Now most ASX copper miners and explorers are also involved with other metals, like gold and nickel, to name a few. When you’re digging into the dirt, after all, you’ll separate out anything with value.

But it’s shares with a sharper focus on copper we’ll stick with today. Shares like OZ Minerals Limited (ASX: OZL), Sandfire Resources Ltd (ASX: SFR), and Aeris Resources Ltd (ASX: AIS).

These ASX copper shares are sliding today

Aeris Resources’ share price is down 2.8% in afternoon trading, giving the company a market cap of $195 million. Aeris has struggled this year, with shares down 7.3% in 2021.

Over the past 12 months, however, it’s a different story, with Aeris’ share price soaring 155% since 30 April last year.

Sandfire Resources’ shares are also slipping today, down 4.2% at the time of writing. This comes after the ASX copper share hit an almost 2-year high on Wednesday, following the release of its quarterly activities report. That report indicated that costs were in line with estimates while production was forecast to come in at the upper end of guidance.

With a market cap of $1.2 billion, Sandfire Resources is part of the S&P/ASX 200 Index (ASX: XJO). The ASX copper share pays a 3.3% dividend yield, fully franked. And while the share price has slipped today, shares remain up 47% over the past 12 months and up 23% year-to-date.

OZ Minerals counts as the largest ASX copper share of the 3, with a market cap of $8 billion. OZ Minerals’ shares were down 2.7% earlier today and are currently down 1.4% since the opening bell. OZ Minerals pays a 1% dividend yield, fully franked.

Like the other ASX copper shares above, OZ Minerals’ share price also remains a strong performer despite today’s retrace. OZ Minerals’ shares are up 168% over the past 12 months and up 24% so far in 2021.

All 3 ASX copper shares have handily beaten the returns from the ASX 200 over the past full year and year-to-date. The ASX 200 is up 27% in the last 12 months and has gained 5% in 2021.

Copper eyeing all-time record highs

Many factors determine how well a resource miner performs and what kinds of returns they can deliver to shareholders. But the price of the commodity they dig from the Earth remains a critical aspect to their success.

Looking at the returns of the ASX copper shares above, then, it will come as little surprise that the price of copper has almost doubled in the past year.

That’s right, on 1 May 2020 a tonne of copper was selling for US$5,110. At the time of writing, that same tonne is worth US$9,885. That’s down, incidentally, from US$10,000 per tonne just a few hours ago. And it remains within a whisker of the red metal’s all-time high of US$10,190, set in February 2011.

Like many other metals, including iron ore, copper is benefiting from record low-interest rates across most of the world, while developed nations open up the spending taps for infrastructure projects to boost their pandemic addled economies. Copper is also a core component in the wiring and batteries needed for most electric vehicles along with power grid battery storage.

What can investors expect next from copper prices?

A growing list of analysts is forecasting a strong mid to longer-term outlook for copper prices. Which in turn should continue to offer welcome tailwinds for ASX copper shares.

As Bloomberg reports:

With copper demand set to soar once more, there are mounting concerns that producers will struggle to plug the gap as they battle a host of technical and regulatory pressures. In the longer term, producers worry that plans to boost mining royalties could stifle investment.

Robert Edwards, Principal Analyst, base metals at CRU Group is decidedly bullish on the outlook for copper. Edwards says, “The copper price has gone stratospheric and probably has further to go, which is a boon for miners who are currently making at least two dollars for every one they spend getting metal out of the ground.”

Wenyu Yao, senior commodities strategist at ING Bank also has an optimistic outlook for the red metal. According to Yao:

The copper rally still has legs to go. The outlook for the US economy keeps getting better. Economic reopening coupled with massive stimulus, faster-than-expected vaccine rollouts and supportive fundamentals all point to even higher prices.

Speaking of a rally with legs to go, Tom Palmer, the CEO of gold mining behemoth Newmont Corporation (NYSE: NEM) told Bloomberg TV, “I think copper’s got a pretty good story in front of it. I think its day in the sun is more toward the end of this decade.”

We’ll leave off with Goldman Sachs, whose analysts forecast the red metal will trade at US$11,000 per tonne inside of 12 months. Goldman sees 2 or more years of price gains ahead for copper from there. The broker forecasts a price of US$11,875 in 2022 and US$12,000 in 2023.

If the bullish case for copper pans out as these analysts expect, ASX copper shares should be among those to benefit.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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