Glencore (LSE: GLEN) shares are suddenly flying, and nobody is more surprised than me. The FTSE 100 mining giant has caused untold damage to my self-invested personal pension, and I was beginning to lose all hope.
I’ve just been looking at recent FTSE 100 performance figures, and it turns out the Glencore share price has jumped more than 16% in a month. Frankly, I couldn’t tell by looking at my account. I bought the stock in July and September 2023, at an average price of 458p. At today’s 288p, I’m still down 37%.
Even after this rally, the stock is still down almost 40% over 12 months. A $1bn share buyback, announced in February, also hasn’t done much to lift the mood. So what’s behind the sudden outbreak of optimism?
Disappointing results
The company’s latest quarterly numbers, published on 30 April, were hardly sparkling. Copper production dropped 30% to 167,900 tonnes, due to weaker output at key sites. Nickel fell too, by 21%.
There were some bright spots. Cobalt jumped 44% to 9,500 tonnes, and zinc was up 4%. Steelmaking coal soared to 8.3m tonnes, boosted by the Elk Valley Resources acquisition. But energy coal output dipped 7% following planned mine closures.
Full-year guidance was mostly unchanged. That helped steady nerves, but didn’t exactly scream growth. Chief executive Gary Nagle flagged continued uncertainty and volatile markets, while noting that commodity trade routes were still largely intact for now.
Analysts sceptical
On 1 May, Berenberg trimmed its price target from 400p to 380p, describing the Q1 update as a miss. The broker also cut its 2025 earnings per share forecast by 19%, after adjusting for weaker production volumes and softer performance in the marketing division. It said the market was now worried about further risks to guidance.
Yet Berenberg still rates the stock a Buy. It reckons Glencore needs a strong Q2 and rising coal prices to trigger a proper re-rating. I remain cautious. I’m still a bit shell shocked.
A big recovery
On 12 May, sentiment brightened after signs of progress between the US and China on trade. That helped boost confidence across the sector, as miners have long benefitted from Chinese demand. Yet any recovery in global growth looks fragile. The OECD cut its global growth forecasts on 3 June, to 2.9% for both 2025 and 2026. That helped knock mining stocks again.
I’m still in duck and cover mode but analysts remain strangely bullish. Of the 19 who’ve given one-year stock ratings, 15 call it a Strong Buy. Another two say Buy. Two say Hold. Not a single one says Sell. That strikes me as baffling, given recent woes and uncertain recovery prospects.
The 16 analysts who’ve issued share price forecasts are even more bullish, with a median target of just under 377p. That’s a 30% gain from today and based on current movements could be possible. That would be wonderful if true but I’d still be in the red.
Maybe I’m just worn down after a long spell of losses. It’s a cyclical stock, and cycles usually turn in the end. Contrarian investors might consider buying while it’s still in the doldrums. For now, I’ll tighten the strap on my tin hat and hope for the best.
