Gold gets plenty of attention, but the outlook for base metals like copper is also positive in 2021. RBC Capital Markets analysts raised their 2021 average price estimate from $3.25 to $3.50 a pound due to higher consumption estimates. They expect copper consumption to be higher this year due to indicators that the economy is strengthening.
In a recent report, analyst Sam Crittenden and his team said the backdrop for copper remains positive this year, while low inventories support higher prices. However, they expect the supply response throughout the year to be gradual from both mines and scrap. These factors could moderate the copper price.
Copper equities also remain well-positioned in 2021, and the RBC analysts are starting to see multiple expansion as investors become more interested in the sector.
They note that North American base metals stocks have traded at an average EV/EBITDA multiple of 5.8 times over the last decade. On the other hand, the TSX index trades at a multiple of 9.2 times. Currently, North American base metals stocks are trading at a multiple of 6.9 times, while the TSX is at a multiple of 12 times.
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