ii view: why Glencore shares just rallied to 9-month high

Third-quarter production update to 30 September

• Copper production of 240 kilo tonnes (kt), up from 176kt in Q2

Guidance:

• Now expects full-year copper output of between 850kt and 875kt, narrowed from a previous 850-890kt

Chief executive Gary Nagle said:

“Underpinned by a strong third quarter production performance, particularly in copper and coal, full-year 2025 production guidance for our key commodities has been maintained, with ranges tightened to reflect just one quarter remaining.”

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ii round-up:

Glencore (LSE:GLEN) today detailed quarterly production for key commodities ahead of City estimates, with the miner and commodity trader leaving estimates for annual output broadly unchanged. 

Third-quarter copper production to late September of 240,000kt climbed from 176,000kt in Q2. Analysts had forecast 232,000kt. Copper accounts for around a quarter of Glencore profits, with the metal hitting a new record high overnight on hopes for successful trade talks between the US and China.

Shares in the FTSE 100 company rose 6% in UK trading having come into this latest news little changed so far in 2025. They're now as high as they've been since January and have risen more than 80% since the April low. The FTSE 100 index is up almost 18% year-to-date, while precious metals miners Fresnillo (LSE:FRES) and Endeavour Mining (LSE:EDV) have more than doubled. 

Glencore is both a producer and trader of more than 60 different commodities. Energy coal and steelmaking coal output each rose from the previous quarter, with each beating analyst estimates by around 10%. Coal accounts for a further 25% of Glencore profits.

The Switzerland headquartered company reiterated recently upgraded profit estimates for its trading, or marketing business. Full-year adjusted profit (EBITDA) is forecast at between $2.3 billion and $3.5 billion. 

Zinc production of 244kt fell from the prior quarter’s 252kt, but broadly matched analyst hopes. Zinc accounts for around 17% of group profits. 

Management narrowed its expectation for full-year copper production to 850-875kt versus 850-890kt previously. Estimates for steelmaking coal were left unchanged while those for energy coal were raised marginally. 

Broker Morgan Stanley reiterated its ‘overweight’ stance on the shares post the news. A capital markets day is scheduled for 3 December. 

ii view:

Founded in 1974 and merging with Xstrata in 2013, Glencore today employs over 150,000 staff and contractors globally. The trading business accounted for 31% of first-half adjusted profit, with industrial or mining the balance of 69%. Geographically, China and Singapore provided around 12% of 2024 sales. The US and UK followed close behind at around 11%, with other Asian countries a further 23% and Europe and Africa coming in at 17% and 5% respectively.  

For investors, a near one-fifth retreat in coal prices year to date is not to be overlooked. Glencore’s involvement in coal production may deter some new investors given its role in climate change. A trade deal between the world’s two biggest economies, the US and China, has yet to be agreed, while Glencore’s forecast dividend yield of around 2% is less than rivals such as Rio Tinto Ordinary Shares (LSE:RIO) and BHP Group Ltd (LSE:BHP) at 4% or more. 

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On the upside, the trading or marketing business provides diversity not seen at other miners, with trade tariff uncertainties possibly buoying volumes. Glencore provides exposure to energy transition metals such as copper, cobalt and zinc, used in batteries. An arguable backtracking on global climate change aspirations may leave its involvement in energy coal looking more sensible, while a ratio of net debt-to-adjusted profit of 1.08 times as of late June points to a relatively robust balance sheet. 

For now, and while risks remain, Glencore’s diversity of operations and a consensus analyst estimate of fair value above 395p per share, should keep investors optimistic about the long term.  

Positives: 

• Diversity of commodities and operations
• Previous major share buybacks

Negatives:

• Uncertain economic outlook
• The weather can hinder production

The average rating of stock market analysts:

Buy