3 Plays on Industrial Metals: Alcoa, Vale and Glencore

09/15/2017 2:50 am EST

Focus: COMMODITIES

Jim Powell

Principal Analyst, Global Changes & Opportunities

Industrial metals are also moving up, and so are profits for early bird investors. As long as the global economy remains relatively healthy—as is likely to be the case for many months—the demand for raw materials should stay strong, explains Jim Powell, editor of Global Changes & Opportunities Report.


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The outlooks for, aluminum, iron ore, and cobalt are especially good. My top recommendations for each

of them are Alcoa (AA), Vale S.A. (VALE), and Glencore PLC (GLNCY).

The rise in price is due largely to sharp cutbacks in production by China to reduce its serious air pollution. At the same time, demand for aluminum is rising throughout the industrialized world. Both developments seem likely to continue. If you own Alcoa, there is no need to buy anything else to ride the aluminum upturn.


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Iron ore prices are also rising, and are now at their highest level in five months. Iron, of course, is the principal ingredient in steel that is being used in increasing quantities throughout the world, especially in developing nations that are enjoying building and manufacturing booms.

Both cycles tend to be long-lasting which should keep the demand for iron ore on an upswing until a recession ends the party.

Of the many producers of iron ore, I think Vale S.A. offers investors the best outlook for gains. This large, international company is based in Brazil – but it sells its iron ore worldwide.

The company also produces manganese (another important ingredient in steel), nickel, and small amounts of other metals that are mostly byproducts of its major operations.

The stock is traded in the US. As its price chart reveals, Vale is now recovering from its recent slide, and should continue to do so — albeit with periodic reversals that are common in the commodities industry.

Cobalt is also shooting up. The metal is a critical element in the production of lithium batteries in electric cars, an application that consumes 42% of production.

Cobalt prices doubled in the last year alone. Some energy analysts are predicting a 30-fold increase in cobalt demand within 10 to 15 years which should send its price into the stratosphere.7 This is a hot new metal play that few investors know about.

I believe the best cobalt investment is Glencore Plc, a large UK miner and commodity trader whose stock is actively traded in the US.

Glencore is primarily a copper producer, but it is also the world’s leading producer of cobalt, and quite a bit of the world’s nickel. All three metals are needed in large quantities in electric cars and many other battery-powered devices.

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