The Glencore share price has been in a relatively tight range in the past few weeks as investors reflect on the price action in tje commodity sector. The GLEN stock is trading at 336p in London, where it has been in the past few days. It is about 217% above the lowest level in March 2020.
Glencore has a catalyst
The Glencore share price has lagged mostly because of the overall performance of key commodities like iron ore and copper. In the past few weeks, the prices of these metals has dropped substantially as investors reflect on the slowing demand from China.
The country has also asked its top steel producers to slow down their production. Indeed, data published today showed that the country’s industrial profits declined for the past six straight months.
The Evergrande crisis has also contributed to the weakness of iron ore prices. Analysts believe that the collapse of the company will have an impact on the construction industry. As a result, many banks will try to limit their exposure to the industry.
Still, Glencore has a major catalyst that could push its stock price higher. For one, unlike other firms like BHP and Rio Tinto, it does not mine iron ore.
The company could benefit as coal prices bounce back. This is notable because it is one of the biggest coal miners in the world with an annual production of more than 104 million metric tons. The coal business had an EBITDA of more than $9.1 billion.
Coal prices have more than doubled this year to more than $180 a ton. This growth is mostly because of the rising demand, supply shortages, and lack of mining investments as companies shift to clean energy. Also, the rising natural gas prices have led to more demand for coal.
Glencore share price forecast
The daily chart shows that the Glencore share price formed an ascending triangle pattern whose top part is at 339p. The stock has risen above the 25-day and 50-day moving averages while the Relative Strength Index (RSI) is at a neutral level.
Therefore, the stock will likely break out higher in the coming days as bulls target the next key resistance at 400p. On the flip side, a drop below 320p will invalidate the bullish view
