While demand has yet to catch up with supply in the current market environment, automotive manufacturers are already anticipating that electric vehicle (EV) demand will rise in the future, which could drive copper prices even higher.
Automotive manufacturers are already in a pinch when it comes to selling EVs. As mentioned, demand is outpacing supply, leading to a glut of EVs that simply can’t compete with the lower price point of gas-powered vehicles.
Realizing that in order to make them more marketable, auto manufacturers will need to bring down prices of EVs to compete with their petrol-powered counterparts. That will prove to be difficult, especially if copper prices continue rising the way they have been.
“A ten-year high in copper prices has put the automobile sector at risk,” an OilPrice.com report confirmed. “This price increase may drive up production costs since copper is an essential component in the construction of cars, particularly electric vehicles (EVs). As a result, automakers could have to raise car costs or deal with lower profit margins, which might limit customer demand.”
More Upside for Copper ETFs
With the EV market set to expand in the coming years, this should continue to provide a bullish backdrop for copper prices. In turn, miners will benefit from the increased copper demand. A pair of copper miner ETFs from Sprott could continue to see more upside.
Given the growth prospects, investors may want to give these ETFs a closer look:
- Sprott Copper Miners ETF (COPP): Copper miners track the metal’s spot prices more closely. They exhibit high beta and at times, more pronounced moves in relation to the spot price. All in all, bullish retail traders may want to consider mining stocks. COPP seeks to provide investment results that correspond generally to the total return performance of the Nasdaq Sprott Copper Miners Index (NSCOPP). It is designed to track the performance of a selection of global securities in the industry, including producers, developers, and explorers. COPP provides blanket exposure to the copper mining industry, focusing on large, mid, and small-cap mining companies.
- Sprott Junior Copper Miners ETF (COPJ): this fund is ideal for investors who want to focus on even more aggressive growth prospects with small-cap exposure. The fund seeks to provide investment results that track the total return performance of the Nasdaq Sprott Junior Copper Miners Index. The index incorporates mid, small, and micro-cap companies entrenched in copper-mining-related businesses.
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