Image source: Getty Images
The Glencore (LSE: GLEN) share price has had a torrid time as of late. So far this year it’s lost a quarter of its value and is down 40% in a year. Tariffs might be hitting global stock markets, but I think most investors are missing a trick here as tariffs are likely to be very beneficial to this commodities trader.
Copper prices surging
Last Monday (31 March) copper prices in the US surged to an all-time high. In 2025, the price of the red metal in the US is up 25%. However, on the London Metals Exchange (LME) prices are up less than half that amount.
Prices in the US and on the LME almost always move in lockstep. The reason for the difference is that US manufacturers and suppliers are pre-empting import taxes from the US administration and are moving to shore up their supplies.
What is happening here has all the hallmarks of what has been unfolding with gold recently. Buyers desperate for the physical stuff have been raiding London and New York vaults.
Arbitrage opportunities
This kind of dislocation in markets is what Glencore thrives on. It has an unparalleled marketing division that is able to profit from volatility in commodity prices.
The price discrepancy for copper in different geographic locations is creating significant arbitrage opportunities for the business, upon which it is able to generate a fee.
In fact, I believe that tariffs, the threat of future tariffs, and the possibility of all-out global trade war may not be good for long-term global growth, but in the short term they are likely to turn out to be very profitable for its marketing division. And it just doesn’t trade copper, but a basket of commodities.
Copper deficit coming
I remain firmly convinced that a copper deficit is coming in the future and can only lead to one thing: significantly higher prices.
Copper is used in the manufacturer of virtually any product one can think of, including mobile phones, traditional automobiles, and construction. But demand is also coming from new facets of the economy such as renewables, EVs, electricity grid infrastructure expansion, data centres, and AI.
Glencore estimates that supply needs to increase by about 1m metric tonnes a year out to 2050 to meet the surge in expected demand. Given the amount of known copper reserves from existing mines, a demand shortfall is a given.
Risks
The business made a loss of £1.6bn in 2024. A huge chunk of this was down to record low treatment and refining charges for copper and zinc concentrates, hitting its smelting operations.
This remains an ongoing issue. The miner is now in the process of shutting a significant portion of its smelting operations across the globe, in order to stem the losses.
However, I still believe that Glencore represents one of the best opportunities in the FTSE 100. The inner mechanics of its marketing division may be a closely guarded secret, but it has a history of becoming a cash cow in periods of heightened commodity volatility. One only has to look at 2022 for evidence of that. Its share price could fall further, but I intend to add to my position as soon as my finances allow.
