Glencore share price firms as it estimates bumper trading profits

Glencore (LON: GLEN) share price continued recovering after publishing a strong trading statement on Friday. The shares were trading at 500, which was ~20% above the lowest point in March. It has become one of the top-performing mining stocks this year.

Glencore trading statement

Glencore, the giant mining and trading company, has been in a spotlight in the past few weeks. This is after the company engineered the biggest mining news of the year with its bid to acquire Teck Resources.

Glencore’s idea is simple. It aims to combine with Teck Resources and then split its business into two firms. One of the companies will focus on the coal business, which has been disliked by most ESG-focused investors.

The other business will focus on metals. Analysts believe that the metals business will be well-positioned for the future considering that demand is expected to surge. As I wrote here, expectations are that there will be a copper shortage, which will push its price higher.

In a statement, Glencore said that its business will still be highly profitable this year. In a trading statement, the firm said that it expects its trading profits will be between $2.2 billion and $3.2 billion this year. It also maintained its mining production target for the year.

Glencore benefited substantially in the recent commodity supercycle that pushed demand of most of its commodities jumped. In 2022, the company’s total profits came in at over $17 billion, the best performance on record. 

As I wrote in my last article, I believe that Glencore should not go ahead with Teck’s $23 billion acquisition. Instead, the firm should spend most of these funds buying back its stock or pay a dividend. I argued that Glencore’s diversified business, including coal, was a positive for the company.

Glencore share price forecast

GLEN chart by TradingView

Glencore stock price has crawled back in the past few months even after the company increased its offer to buy Teck Resources. The shares have jumped from 411.40p on March 15 to a high of 500p. It has moved above the 25-day and 50-day exponential moving averages (EMA), 

The stock has jumped above the important support at 413p, which was a double-bottom level. Therefore, my outlook of Glencore is neutral and I suspect that it will remain in this range for a while. The next key levels to watch will be March’s low of 413p or the year-to-date high of 586p.

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