In today’s briefing:
- Relative Value Opportunities in Asia-Pac, Pair Trade Roundup (8 Dec)
- Copper: Fly Me To The Moon, Onwards To 13,000 USD/Ton
- Oil futures: Crude holds gains as peace talks stall, rate cut optimism
- Iron Ore 65-62 Spread Widens, Despite The Commencement of Simandou Shipments
Relative Value Opportunities in Asia-Pac, Pair Trade Roundup (8 Dec)
- Context: This Insight follows up on previously highlighted relative value opportunities, using a statistical methodology based on mean-reversion to identify opportunities in paired securities.
- Highlights: Currently nine pair trade opportunities across four markets and six sectors persist.
- Why read: Statistical analysis offers a unique perspective on relative value. Gain insights into actionable statistical pair trade opportunities and monitor performance of previously highlighted pairs.
Copper: Fly Me To The Moon, Onwards To 13,000 USD/Ton
- The trend of stockpiling in the US has continued, and copper inventories in warehouses surged to over 436,000 tons. Inventories at the seven COMEX warehouses have more than tripled YTD.
- Copper Production Disappointments Mount With Antofagasta (ANTO LN) Guidedown, Bullish To 12k USD/Ton supply issues detailed provide the perfect confluence for copper to breach 13,000 USD/ton by early 2026.
- As copper has recently surpassed 11,500 USD/ton, we pick Southern Copper (SCCO US) and Antofagasta PLC (ANTO LN) as our top equities to play the copper run.
Oil futures: Crude holds gains as peace talks stall, rate cut optimism
- Crude oil futures were steady on the week but up from Monday’s lows after US-Russia talks failed to find a breakthrough, while growing optimism on a US rate cut also helped to bolster sentiment.
- Front-month Feb26 ICE Brent futures were trading at $63.71/b (2041 GMT) versus Thursday’s settle of $63.26/b, while Jan26 NYMEX WTI was at $60.07/b against a previous close of $59.67/b.
- Benchmarks recovered from early-week lows, rebounding around 2% after negotiations between the US and Russia in Moscow broke off without a deal to end the Russia-Ukraine conflict.
Iron Ore 65-62 Spread Widens, Despite The Commencement of Simandou Shipments
- There were further updates on the Simandou iron ore mine, which commenced operations last week, igniting bearish sentiment and taking iron ore prices down 3% WoW to 103 USD/ton.
- Demand, though, for higher-grade material remains strong, resulting in a widening spread between 65 and 62 Fe to almost 16 USD/ton (from 12-13 USD/ton a week ago).
- We favor Fenix Resources (FEX AU) for its high growth profile and potential to increase production from 1.5 million tons to around 10 million tons.
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