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New data generated via artificial intelligence has revealed that institutional investors are expecting plenty of positive news from Glencore [LSE:GLEN] at the moment.

Large investors in Glencore stock are exhibiting strong short term and long term positive bias on Glencore, according to data from AI developers Irithmics.

Glencore stock has reflected this and has been on a strong push from a low of 155 which it hit at the end of October. Daily volumes in the shares have also picked up as we have seen stock move up to the 270-275 level. The company is now trading at pre-pandemic levels.

Big investors expect more from Glencore

Data from Irithmics also indicates that institutional investors are anticipating further good news from the company in the near future. We have been seeing some heavy buying of Glencore stock since the start of the year, which also reflects this institutional pattern.

The broker market remains split on Glencore, with five buys and five holds among 10 brokers covering the stock.

We are still bullish on copper at the moment, and note Glencore’s strong position in the copper space. Glencore’s own sourced copper production of 934,000 tonnes was 81,000 tonnes lower than the comparable period according to its Q3 numbers. This reflects its Mutanda operation being put on care and maintenance and the temporary suspension of operations at Antamina in Q2. This was partly offset by strong milling performance at Collahuasi and Katanga’s ramp up.

Cobalt could be the new oil

More critical is Glencore’s role in the cobalt market, which many analysts are now calling the new oil, as it is considered so important to the ongoing switch to EV vehicles over the next decade. Glencore had seen cobalt production down by over a third, again in line with the impact of the pandemic across the broad mining industry, including in Africa.

Glencore has said it is extending its partnership with GEM Co in China for the supply of cobalt hydroxide for another five years. The two companies have formally embedded responsible sourcing and sustainability into their partnership, which is going to be critical for miners like these as they seek to develop established and sustainable mineral supply lines for EVs.

Under the terms of the agreement in December, which it announced with GEM Co, Glencore will provide another 150,000 metric tons of cobalt contained in hydroxide between 2020 and 2029.

Glencore is a key player in global cobalt market

Glencore remains a key player in the global cobalt market, and this will be one to watch in 2021. We are slightly cautious on Glencore ourselves, as the share price has already broken through its 52 week high barrier. However, there are some new dynamics being released here as manufacturers scramble to secure sources of supplies for electric batteries. This means we may need to stop thinking about Glencore as a miner and more as if it is an oil company, in terms of its behaviour.

Note that Glencore has also inked a deal to supply Tesla with cobalt from its Congo mining operations. It will be supplying Tesla factories in Shanghai and Berlin with the metal, which is used in lithium-ion batteries. According to the Financial Times, this could involve up to 6000 tons per year from Glencore mines.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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