Reflecting choppiness in the global economy over the last decade, Glencore (LSE:GLEN) shares have been similarly volatile as commodity prices have lurched up and down.
After hitting record highs of 584.5p per share in January 2023, Glencore’s share price has tumbled to current levels of 266.7p. This more recent collapse means someone who parked £10,000 in the FTSE 100 company a decade ago, at 313.7p, would have seen the value of their investment drop to £8,508.
Yet thanks to dividend payments totalling 124p per share over that period, they’d have managed to eke out a positive return of 24.6%. For that £10k initial investment they’d have made a total return of £12,459.
That’s not awful in the context of recent macroeconomic upheavals, including China’s economic slowdown, the global pandemic and, more recently, the worldwide introduction of new trade tariffs. However, Glencore’s shares have still disappointed compared to the broader Footsie (the index’s total return is 85% over the same period).
But could things be looking up for Glencore’s share price? And should investors consider buying the commodities giant today?
Bright forecasts
The bad news is that share price forecasts for the next 10 years are unavailable. But on the plus side, City analysts are unanimous in their belief that Glencore shares will bounce back sharply over the coming year.
Of the 16 brokers with ratings on the business, the least optimistic believes prices will rebound close to 300p over the next 12 months. That still represents a double-digit-percentage increase. Analysts consensus is that Glencore shares will spring back to just below 390p by next April. One especially bullish forecaster has tipped prices to move above 470p.
Trade talk
However, their capacity to rebound will be compromised if thumping trade tariffs come into effect. Latest import data from China — by far the world’s biggest copper consumer — showed inbound red metal shipments slump 5.2% between January and March. This is bad news for Glencore, which generates substantial earnings from the production and trading of copper. But the story doesn’t end here, as the firm also deals in many other cyclical commodities including aluminium, nickel, aluminium, oil and coal.
Encouragingly, President Trump has cooled speculation over a full-blown trade war in recent sessions. Some tariffs have been delayed, and this week he said rates on China would “come down substantially.” However, investors need to be aware that the situation is fluid, and that the mere threat of trade frictions is enough to substantially damage global growth.
Time to buy Glencore shares?
Some long-term investors might not be put off by this immediate uncertainty however. And as someone who holds mining shares, I’m certainly upbeat about the sector’s outlook to 2035. Put simply, the demand outlook for many industrial metals remains extremely bright for the next decade. This is thanks to the spectrum of structural opportunities that Glencore has a chance to capitalise on.
The growth of renewable energy, for instance, is tipped to supercharge consumption of copper, aluminium, nickel and iron ore. Other phenomena like emerging market urbanisation, the booming digital economy, and resurgent defence spending all bode well for metals demand.
Today, Glencore shares trade on a forward price-to-earnings (P/E) ratio of 13.2 times. At this level, I think the FTSE 100 miner is worth a serious look.
