TD not worried about copper !!Overweight sector recommendation maintained. We believe that the spectacular rally in commodity prices through May was driven by a combination of the global reopening, speculative positioning, a weaker U.S. dollar, and a highly accommodative Fed.
The recent pullback in mining equity prices may have further to go as investors adjust expectations for a more hawkish Fed and a stronger U.S. dollar.
But we also continue to believe that we are in a secular bull market for copper (energy transition, EVs, the green economy, etc.) and that the pullback will prove to be a buying opportunity. Copper producer share prices are discounting a price below our upwardly revised long-term/incentive price, which suggests to us that there is value in the sector.
Our top picks are Teck Resources (ACTION LIST BUY), First Quantum (BUY), Champion Iron (BUY), and Solaris Resources (SPECULATIVE